Paying for a house with a swipe of your mobile phone sounds like something from fiction or a financial nightmare. The biggest financial decision of your life boiled down to a swipe of a smartphone. And this is exactly what has happened with one individual using a newly launched Barclays app to put down a £23,000 deposit and secure their dream home.
Some people are yet to get their heads around using smartphones to pay for groceries, let alone a house, but Barclays is moving things forward in a new partnership with specialist property auctioneers Savills. Successful bidders can now pay for their new homes using the bank's Pingit payments service mobile app. All they need to do is use the app to scan the relevant QR (quick response) code supplied by Savills and the money is transferred to the auction house almost instantaneously.
Sam Winser of Savills says: "Creating a service that allows a buyer to put down a deposit and transfer the money in a matter of seconds, such as Pingit, is really making a big difference to our speed and efficiency, allowing us to do more business, more quickly.
"It gives buyers the ability to send and for us to receive guaranteed funds immediately, which is obviously hugely advantageous."
There can be little doubt that mobile payments are the future – the Centre for Economic and Business Research predicts that 20 million adults will use their mobiles to pay for goods and services by 2020.
Embracing technology has become an unavoidable part of our property market. Most sales begin with a search on the internet and homeowners are even using sites such as Tepilo (which was set up by TV presenter Sarah Beeny) to bypass the high-street estate agents altogether.
There are also lots of useful tools for buyers including browser add-on Property Bee which tracks listings and prices which have changed over time – ideal if you're looking for discounted homes and motivated sellers.
On a practical level, being able to swiftly put down a deposit at auction is a sensible move, not least because successful bidders are required to pay a 10 per cent deposit on the day and could be sued by the seller if they fail to do so.
However, with great power comes great responsibility. Buying property is usually the largest purchase people make in their lifetimes and handing over tens of thousands of pounds at the push of a button could easily make light of that. Bidding on property at auction is already a potentially risky option. Once your hand is up, you've reached point of no return so you need your wits about you.
James Greenwood, of Stacks Property Search, says: "When the hammer goes down, that's it, you've exchanged legally binding contracts. There is a lot to be done before you even reach the auction room."
Compared to a traditional buying process, the time constraints make it easy to slip up. If you do put in the winning bid, you immediately owe a 10 per cent deposit and then have only 28 days to pay the rest so it is essential to have your finances ready beforehand, or risk seeing your deposit go down the drain. Cash buyers have the edge because they can move faster than anyone else, but if you need a mortgage, get a firm offer on the table and make sure your solicitor is ready-in-waiting to prevent delays. If you win the bid, the property is instantly your responsibility so you'll also need buildings insurance lined up.
Be warned that a mortgage agreement-in-principle is not always enough as banks are still free to pull out of the deal leaving you with just a few weeks to find an alternative. You may prefer to play it safe and get a mortgage approval in place (which will mean your lender carries out a valuation on the property).
Adrian Anderson, of mortgage broker Anderson Harris, says: "Buying property at auction is a serious business so it's important that you understand exactly what you are getting into beforehand. Once the gavel comes down you are committed to the purchase; there is no 'cooling off' period so you need to have all your ducks lined up beforehand."
All of the legwork has to be competed – and paid for – before the day of the auction and without knowing if you will be successful.
Cutting corners is a risk as properties on offer tend to be local authority or housing association stock, or homes that would struggle to sell on the open market. You usually get a two-week window to view the property and go over the auction pack to check the title deeds, local authority and environmental searches. You can bring a builder along to the viewing to gauge the cost of repairs, but the only way to play it safe is to pay for a full buildings survey. You may end up losing the bid but it could be far worse to get the property and then face crippling bills for repairs.
Above all, you need to decide how much you are willing to pay. Previous auction sales can be a useful way to gauge the market value of similar properties but take auction guide prices with a pinch of salt – a low guide price is an easy way to get a crowd in. Some auction houses will even take offers in advance so it's worth asking if you can put an offer in early. Otherwise, a few dummy runs can help settle the nerves and you can even watch auctions online via the Essential Information Group website to get a feel for the process. On the day itself, you absolutely must read the addendum sheet which will tell you if there have been any mistakes or changes since the catalogue was published.
Mr Greenwood says: "You don't want to be nervous because of uncertainty or doubt. You should be walking in confident that you know everything you need to know about the property."