Prospective buyers to benefit as sellers cut prices at auction

Permalink: Prospective buyers to benefit as sellers cut prices at auction
by Kay Murchie

Auction specialist, the Essential Information Group (EIG), has revealed that auctioneers are forcing sellers to slash their prices.

The news will no doubt be welcomed by first-time buyers looking for a bargain in the wake of falling property prices.

EIG has revealed that an increasing amount of homes are failing to sell at auction resulting in auctioneers demanding realistic reserve prices.

The group established that in the three months to August, just 54% of residential properties going under the hammer sold, compared to 71% in the same period last year.

According to David Sandeman, EIG’s MD, auctioneers are telling vendors that prices have to come down and if you have a property with an estate agent that’s been on the market for £300,000 and isn’t selling, then the reserve needs to be £220,000 or £230,000 maximum, not £280,000.

Once the hammer falls, a property is sold and buyers are required to put down 10% of the value of the property as a deposit in order to confirm the sale.

Anyone considering buying a house at auction is advised to get their finances in order first.

Many do not realise that if they bid over the market value of the property they may not get a mortgage for the full amount and once their bid is accepted they are legally committed to buy it. This means that getting finance in place is vital.

In the last year, house prices have continued to decline with the latest figures from the Halifax showing house prices falling by 1.8% in August, with an annual decline of 12.7%.