Auctions have burgeoned in recent years because of the huge amount of property repossessed by building societies. One of the first questions on Channel 4's controversial spoof game show for the homeless, Come On Down and Out, concerned the number of repossessions. The answer: more than 68,000 in 1992 alone. Although lower mortgage rates mean fewer repossessions, business failures mean that these type of auctions will remain part of the property market for some time.
Buying a repossessed property can save you money. Many auctioneers are going out of their way to make it easier; buyers' reports are sold and mortgages are offered by agents working with the auctioneers.
The fact that repossessions seem cheap does not mean they are always bargains. Most need a vast amount of work and it is advisable to bring a builder to a preview to get an idea of how much work is involved. On the other hand, most properties to be auctioned are vacant. The absence of a buyers' chain is another advantage for the first-time purchaser.
I toured a typical auction property. The flat on the New King's Road in Parsons Green, south-west London, would have been perfect for a single person who wanted to rent out the second bedroom. The last asking price was pounds 74,950 for a 79-year lease and the minimum bid at the auction was set at pounds 50,000. According to the survey, it was structurally sound. But, by my estimate, it needed at least pounds 12,000 to pounds 15,000 spent on it. I calculated that it would be good value at anything up to pounds 60,000.
Phoning around for details of future auctions, I detected a weariness with the enthusiastic bargain-hunter. Some agents had answering machine messages warning that the call was costing 48p per minute. Others told me to call back when the brochure was ready. Despite the fact that there are fewer bargains now, interest in auctions continues to grow.
More than 500 people registered to bid at the auction of the Parsons Green flat and other properties. It was held in a huge conference room at a hotel in Hammersmith. Most of the properties went for close to - even above - the last asking price. Two were genuine bargains, where only one bidder was interested.
Toby Baxendale, at his first property auction, bought the property in Parsons Green. At pounds 60,000, he felt he had a bargain; he would have gone up to pounds 65,000. 'I'm a meat trader at Smithfield market so auctions are a way of life for me. I have all the contacts I could possibly need to help me do this property up nicely.'