Most budding first-time buyers would start by surfing on Rightmove or heading to their local estate agent, but Tom Ridge decided to do things a bit differently.
Ridge, who is a chartered surveyor by trade, successfully purchased a one bed London flat via an online auction with Savills last year.
He said: “I wasn’t planning to buy at auction, but I needed somewhere to live and then I came across a live auction with a suitable flat.”
Despite only becoming aware of it 10 days prior to the auction, Ridge ended up buying the property at Earlsfield, South West London, for £350,000.
He reckons it’s already worth £425,000 - £450,000. Regarding the price, it helps that Ridge was likely the sole bidder, as he only paid £5,000 over the guide price.
Before making the purchase he looked at two other properties via auction, though he decided against bidding on one and missed out on the other. However he describes the process as invaluable in learning how to appraise the risks and gain the confidence to buy at auction..
He added: “I’d recommend working out what you’re happy to pay and be self-disciplined on the day. You will run out of money long before you run out of good opportunities so don’t be disappointed if you are outbid.
“The market seems over inflated at the moment and following the crowd increases the risk of paying over the odds. By taking a different tact, there is less competition for good opportunities.
“Buying at auction is not without its risks, but as long as you price potential problems into your purchase price, the upsides can be great.”
He anticipates upgrading the property to bring its value up to £600,000-£700,000.
The flat has a large garden, which has the potential for a side or rear extension to create a large open plan kitchen/living area. The current living room could then be converted into a second bedroom. Meanwhile the basement could be refurbished to create a utility and TV room.
He envisages spending £100,000 on the afore mentioned upgrades.
He initially completed the purchase with a commercial bridging loan, before securing a mortgage.
Auction purchases are more commonly used by investors rather than inexperienced buyers, though Ridge did have the advantage of working for a commercial property investment firm.
Any buyers considering going for the auction route need to be wary of the risks involved, but if Ridge’s case is anything to go by there’s clearly the potential for all kinds of buyers to make a sensible purchase providing you do your homework.