Spain opens the bidding

In a slowing Costas property market, is the time ripe for buying at auction? Zoe Dare Hall investigates
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The Independent Online

It is a sweltering afternoon on the Costa del Sol and Spain's first property auction is under way. Two people have turned up in beach towels. The other 80 or so - mainly English, average age 45-50 - are keeping their hands clasped firmly in their laps and wishing they'd brought a jacket to fend off the Arctic air-conditioning in Andalucia Plaza hotel. And the spirited Irish auctioneer, Jeremy Herron, has just reached for his mouth organ.

It is a sweltering afternoon on the Costa del Sol and Spain's first property auction is under way. Two people have turned up in beach towels. The other 80 or so - mainly English, average age 45-50 - are keeping their hands clasped firmly in their laps and wishing they'd brought a jacket to fend off the Arctic air-conditioning in Andalucia Plaza hotel. And the spirited Irish auctioneer, Jeremy Herron, has just reached for his mouth organ.

Afterwards, Inex Rix, the co-director of Direct Auctions, agrees: "Jeremy livened it up and got people laughing. People can feel nervous and intimidated at auctions, so we want to simplify the process and remove the mystique. It is serious business, but anyone who comes here has the money and knows if they're going to buy."

Rix, who runs property management company Inderix in Fuengirola, and Barry McEntee from First Choice Properties, launched Direct Auctions in Puerto Banus in June, having waited for the southern Spanish market to turn. "With a falling market here the time is ripe for property auctions," she says. "For the past six years developers have been carving a niche by building huge amounts of new properties and the coast has seen heavy growth, but the market is slowing down."

From the first auction, Rix says one thing is clear: "People aren't happy with inflated prices around here anymore. It's interesting how close to the guide prices properties are going for."

Though only one lot was sold on the day - a two-bed apartment in Nueva Andalucia for €230,000 (£153,000) in need of work but with good long-term letting potential - a further eight properties changed hands after the event. "The following day we had offers at amounts that were above normal but everyone sat on their hands at the auction," says Rix.

Investors have been the main participants so far, but Rix is hoping to increase the confidence in auctions as an alternative way to buy property to attract other buyers. "If you make it clear and simple, anyone can buy at auction. In Australia, 95 per cent of properties are sold in this way. It's a slow pick-up, but we've got a good brand, with properties well below the market value. People are getting a good deal."

The most popular lots are two-bedroom apartments, especially in Marbella's Golden Mile or Nueva Andalucia. "Most people looking to buy at auction are buying apartments for investment not villas to live in," Rix comments.

Three English bidders flew over just for the event, having studied the catalogue on the internet and viewed the properties the day before the auction.

Once a bid is accepted, the buyer puts down 10 per cent of the purchase price and has 28 days to sort out the remaining finance. "We can provide lawyers and mortgage advice so there's no reason why it should be any different buying here than in the UK," says Rix.

Spanish auction houses exist but are run through the courts with sealed-bid tenders. And some past expat ventures on the Costa del Sol have been dubious, says Rix. "As soon as the hammer had fallen, they'd take the client out back and tell them they had to pay an extra €20,000. It's frightening what happens here. This place has been robbed for so many years."

To avoid accusations of robbing anyone, Direct Auctions is challenging the usual commissions charged by agents, which can be up to 10 per cent, by cutting its rate to 2.5 per cent.

Mark Stucklin from Spanish Property Insight, an online consultancy for overseas buyers, warns: "Buying at auction can be a good bet, especially in a falling market where you get a lot more distress sales from people needing to shift properties quickly. But you need to be well informed, which can be difficult if you're only in the country for a few days. It's also easy to get caught up in the heady and competitive atmosphere of an auction and end up paying far more than you planned. Make sure you visit the property and see a good selection of other properties in the area so you know you're not paying over the odds." There is one big advantage to buying property in Spain at auction, adds Stucklin. "You avoid that awful situation of being driven round by estate agents."

Direct Auctions. Tel. 00 34 952 817 673, low cost UK 0871 990 3090 ( www.direct-auctions.com). Next auction at H10 Andalucia Plaza Hotel, Puerto Banus, on 23 September.

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