First-time buyers hit the auctions to find a house

November 23 2008 - Anna Mikhailova - www.timesonline.co.uk

Jason, the estate agent, hurries me in through the door. “The electricity’s out, use your phone for light,” he says, leading the way down a narrow, pitch-black corridor. Inside, tape marked “Do not use” in bold red letters is everywhere – on the sinks, the lavatory, the radiators. It is all rather reminiscent of the “Police line, do not cross” banners at a crime scene.

Repossessed in the summer, the ground-floor flat, in Crystal Palace, southeast London, is about to be sold at auction by Allsop. Files and month-old newspapers piled up in the study, open cereal boxes and washing-up abandoned by the sink suggest the previous owners left in a hurry.

Ten minutes into the viewing, two men dressed in black rush in, throw their bags and biker helmets onto the bed and start shining red lasers on the walls. They are here to do the measurements, Jason explains. Scrambling around in the freezing cold, we are joined by another young man, a casually dressed investor looking for property “bargains” he can snap up and rent out. “It’s the best time to make some money,” he tells me knowingly.

Like other potential first-time buyers, I have been wondering whether prices have fallen enough to make now the time to take my first step onto the ladder. I began my search by browsing web-sites and looking in agents’ windows, but soon began to realise there could be another way: buying at auction.

As the economic crisis bites, more and more properties are going under the hammer – many of them repossessions. Latest figures from the Financial Services Authority show the number of homes seized in the three months to June was 71% higher than in the comparable period last year.

I set a budget of £120,000 – with a bit of optimism about my saving capacity and a lot of fictional borrowing. Flicking through the auction catalogues provided a large choice within my price bracket. I ruled out a three-bedroom terrace in Surrey. I live alone and want to be within an easy commute of the Sunday Times office in Wapping, east London – so I wasn’t tempted by the prospect of a five-reception, four-bedroom house all to myself if it meant moving to Hull.

My initial search led me to a variety of properties – among them a one-bedroom first-floor flat in Kilburn, in the northwest of the capital. Located in a quiet, well-to-do road of pastel terraces and parked Audis, near enough to my usual stomping ground, it seemed ideal – if you ignored the grubby grey walls and ripped-out locks, that is. There was a problem: it turned out to be a former crack den. “Busted in January,” whispered the agent from Savills, which was auctioning the property. I looked at the heavy iron door and metal grating boarding up the windows in a new light. To prevent squatters, I asked? “Yes, that, and in case the drug-gies come back,” he replied.

Fast-forward to the Allsop auction, one of four being held by the company in the space of two weeks, with more than 1,000 lots – about 80% of them repossessions. The Crystal Palace flat was spacious, with one decent-sized bedroom and a tiny second one, exceptionally high ceilings and big windows. The guide price (which is just that: the price at which the property might sell, rather than the reserve, which is kept secret) was £120,000 – attractive, given that one-bed flats in the area are typically priced at £170,000 and two-bedders at £220,000, although they tend to be better presented. Not that there appeared to be anything fundamentally wrong with this one, though: apart from a leak in the bedroom ceiling, everything was fresh and clean, the bathroom and kitchen newly installed.

Earlier, I’d visited two other properties in southeast London, starting with a first-floor flat in Camberwell, just by Loughborough Junction station and, according to the agent, “minutes away from the place where John Major grew up” – which, to be honest, didn’t sound like much of a selling point.

Another repossession, with a guide price of £75,000, the flat was pleasant, with an open-plan kitchen and living room, and a spacious bedroom that overlooked a decked area at the back of the house. It was a good size, on a quiet side street. Thankfully, the viewing was during the day, so the absence of electricity meant I didn’t have to scrabble for my mobile. Again, it looked a good deal: one-bedders in the area tend to go for about £160,000.

The surrounding streets were presentable, but I didn’t fancy the prospect of a daily commute via Loughborough Junction, with its boarded-up houses, pawnbrokers and hair salons with photos of tattooed models advertising “kinky twist” styles. Nor was there much appeal in the idea of living close to a backyard shop with a sign that reads “Metal made and cut to order”.

The third property I singled out was a lower-ground-floor flat in Brockley, a short drive to the southeast. It was on Wickham Road, a beautiful street lined with oak trees and impressive Grade II-listed homes. A five-minute walk from Brockley station (a stop on the East London Line extension, due to open in 2010), the flat was in a Victorian brick house with a jolly red staircase.

It was not quite so jolly inside: the walls were filthy and cracked, and the smell of damp was overpowering. The flat had gone on the market at £190,000 in March, but was going to auction with a guide price of £110,000-£120,000. The owners, who lived in the country and had been letting out the flat, appeared to have put little effort into making it attractive to potential buyers – which was a shame. The ceilings were fairly high for a lower-ground-floor flat and most of the problems were cosmetic: the kitchen cupboards were filthy, while the garish bathroom decor, all fake marble tiles, dirty pink cupboards and swirly bronze handles, made me want to run a mile.

Dealing with all this would cost a lot of money, but given that one-bed flats in the area sell for upwards of £180,000, it still seemed a good deal – although there was one crucial hitch: you could see straight into the bedroom and other rooms from the communal garden, which was shared by five other flats. It was all too reminiscent of the time when I lived in a lower-ground-floor studio in Paris and had a man standing outside my window, cooing: “Are you alone,mademoiselle?”

Then came the big day. The auction was held in the plush surroundings of the Napoleon suite at the Café Royal, on Regent Street – a curiously inappropriate venue, given the quality of some of the properties on sale. When I arrived, the room was packed with a broad range of humanity. Casual bidders dressed in bomber jackets and T-shirts mingled with elderly couples and a few women with babies. As far as I could tell, most were interested in just one or two properties.

Behind them were the serious buyers – investors or developers in suits or ties, many of them constantly on the phone, presumably to a boss or financial backer monitoring proceedings from the comfort of his own office. They had a specific bidding style: they would wait until near the end before joining in, then make themselves known with only the subtlest of nods.

The excitement on the day was contagious. One young woman, a first-time buyer, was so keen to get hold of her chosen home, she kept her hand firmly up throughout the bidding and, once she had won, jumped up and down, exclaiming: “I’ve bought a house!” The auctioneer tried in vain to calm her with a glass of champagne; when it came to signing the documents afterwards, she could barely put pen to paper. “It’s a problem we have,” one auctioneer explained. “People are so full of adrenaline after bidding for the first time, they don’t write their contact details legibly.”

Then it was time for my chosen properties. First up was Lot 709, the Camberwell flat, snapped up for £70,000 (£5,000 below the guide price) by a young man in the corner, in blue cashmere jumper and corduroys. At such a modest price, the commute via Loughborough Junction might have been bearable after all.

Not surprisingly, given its diabolical state, the flat in Brockley, Lot 725, attracted less interest. Although there was some bidding, it stopped at £115,000 – short of the reserve price, which meant it failed to sell. By contrast, Lot 768, the property in Crystal Palace, prompted a fierce round of bidding between four buyers, going up in £1,000 bids so quickly, it was hard to follow. It eventually sold for £109,000 to a man in a grey fleece at the back.

“It’s just like the old days,” said Gary Murphy, the auctioneer. “There were more private buyers than at recent sales, particularly in the southeast. Owner-occupiers, first-timers, would-be second-home owners and investors fought against the professionals.”