Buy your home online and get a bargain!

by Neil Faulkner on 24 February 2010  |  3 comments
Tweet

Online property auctions are a fascinating new way to get on or move up the property market, and Neil Faulkner reckons some good deals can be done.

Buying a property on the internet might seem like a somewhat reckless way to go about things, but it might just be the future. Last week property site Zoopla held its first ever live online property auction. I followed proceedings to see what the fuss was about

It begins

With three days to go, there have been bids on just three properties. However, things change markedly with 24 hours remaining - dozens of offers have now come in, but at this stage they're just 1/3 to 1/2 of the guide price.

What's more, none have met the secret reserve price - the minimum that the property can sell for. If they're looking for crazy bargains, it seems at first that buyers have come to the wrong place.

With six hours to go, Lot 001, a Farm in Preston - the most expensive property in the auction - received a bid of £588,000: pushing 80% of the guide price of £750,000. Most of the properties have now received bids above 2/3s of the guide price, but still none have met their reserve.

The clock is ticking

There are now 15 minutes to go before the first auction is due to close and two hours before the last. Each auction is expected to close one after the other, with a delay of one or two minutes between them.

And the snail's pace of bidding is officially over; the bids are flashing blue on the screen, like sporadic lightning strikes, hitting each of the nine properties that are displaying on the first page of the auction, showing the auctions due to finish soonest. The whole auction is spread across nine webpages.

Sold!

I click quickly through the other pages and find that one property has already met its reserve price - it will be sold! 

Lot 041, a two-bed terrace in West Glamorgan, with a guide price of a mere £40,000 and a sale price in 2006 of £70,000, could be sold now for just £37,500 if no more bids come in. A minnow has been caught, but what about the bigger fish?

A half-dozen properties are now within 10% of the guide price, most of them ticking up at £500 a time.

I switch back to page one, where I learn that finished auctions disappear when you leave the page - I now have no idea what happened to the most expensive property, the farm. Sadly, Zoopla isn't currently willing to share such information for commercial reasons.

There are now 10 minutes to go on Lot 005 in Morley, and with a guide price of £80,000 it has met its reserve of just £46,500. We have a winner! Was this a bargain, or was this two-bed's leasehold rather short?

Lot 007, a semi in Knottingley, is now down to the last 30 seconds and it looks like it's over, but there's a late bid. A bid this late extends the time of the lottery by two minutes. It's extended another two times as further bids come in, though it never does meet its secret reserve price, and goes unsold.

How many are being sold in this little road in Warrington? Six! A landlord with a not very diverse portfolio is attempting to dump it, but does not succeed with any of them.

• Follow the hints and tips in this goal: Sell your home

Information overload

I refresh the page and see there's a lot more action with many down to less than one minute. One just falls short of the guide price by £3,000, yet the reserve is still not met.

I switch the setting so that I can view 45 auctions on a single page. However, the individual countdown clocks, and bids coruscating continually, is just too much for my browser, stopping it for an agonising five minutes, as I'm unable to follow the many lots that had my attention. I try switching the view back and manage to catch a glimpse of another meeting its reserve before my browser crashes.

Clicking frantically it takes what seems like ages to restart. I miss about 10 auctions.

They're gone, but there are still 35 left. I take a chance and switch the view to 18 per page - my computer copes with the burden. Time remaining here ranges from 1-15 minutes and, although no reserves have yet been met, the auction now looks like an aging frigate - an 18th century ship-of-the-line that preserves its ancient timbers by firing each cannon one at a time in a rippling broadside, each flashing bid a cannon and each auction ending one after the other.

The first to drop out doesn't meet the reserve. But wait - it's provisionally sold, which means that the highest bidder has the possibility of negotiating with the seller. The second, third and fourth are gone, all some 10% to 20% below their optimistic guide prices, while the fifth is provisionally sold, and the sixth.

The next twelve go in minutes. No action. Screen refresh.

A bargain snaffled?

There are just 17 properties left, all on one page. Another reserve is met, extraordinarily: Lot 127 in Durham, last sold for £108,000 in 2008 could be sold now for as little as £32,500. The guide price is just £40,000. Surely this is a leasehold - but no! It's for sale - a two-bed flat with no chain, selling for one-third of its last sale price. 

14 more go with no takers - a bit of an anti-climax. Now, strangely, our two-bed in Durham has disappeared. I could have sworn it had a couple of minutes left. 

One of our last two auctions gives us some half-action, ending with a provisional sale. And the tension is finally over.

• Watch the video: Sort your mortgage online

Is it worth it?

Most of the auctions ended about 10% below guide price, and I noticed no properties going for more than £81,500, so it's likely there were quite a few speculators at this auction. What's more, the auctioneers themselves are allowed to bid, so long as they don't bid at or above the reserve price, which may have pushed up some prices. It may also be that some owners were over-optimistic and priced too high.

Yes, I counted just four meeting the reserve, which presumably will be sold as the highest bidder is now legally obliged to buy, but that's not bad for what was Zoopla's first auction. We can expect activity to pick up in future auctions, which will take place weekly over the four days from Thursday to Sunday.

I'm sure they'll get even more tense as time goes by.

More: Housing market bubbling up again | Top 10 property websites

At lovemoney.com, you can research all the best deals yourself using our online mortgage service, or speak directly to a whole-of-market, fee-free lovemoney.com broker. Call 0800 804 4045 or email mortgages@lovemoney.com for more help.

This article aims to give information, not advice. Always do your own research and/or seek out advice from an FSA-regulated broker (such as one of our brokers here at lovemoney.com), before acting on anything contained in this article.