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| Have you ever been to an auction? |
If you have never attended a property auction before, it can be quite an intimidating experience. Here's a chance for you to pick up a property at a bargain price, but only if nobody else drives up the price by constantly bidding against you. The auctioneer will start off with an opening price, so for example he would say, "I am starting this off at £800,000 - do I hear £805,000 for this house? You sir at the back row, thank you. Current bid is £805,000, do I hear £810,000 for this house? Yes, Madam, on the left near the front, thank you, £810,000. Do I hear £815,000, anyone?" Etc. This can go on and on - properties usually go for about 1.2 to 1.5 times the starting price and there have been a few properties with rather lukewarm responses, thus the auctioneer would say, "I'm sorry, the bids are too low, we shall have to withdraw this one, if you are still interested, please speak to one of my staff at the front desk." That is the same as when the reserve price on eBay just isn't met and the seller automatically withdraws the item from sale.
I was simply sitting still, telling myself, "don't bid, don't bid, don't bid - bidding will only send the price up, jump in at the last moment." I waited till the auctioneer said, "going once, going twice," before putting in my bid. I then got into a bidding war with another bidder (just the situation I wanted to avoid) but that only drove the price up by a further £10,000. The final price I ended up paying was about £125,000 less than another property I was seriously considering buying - here's the thing about buying property. You can get an expert to evaluate what the price is according to current market conditions but ultimately the price is determined by what it can actually fetch in the free market. I got two estate agents to evaluate that property and that is why I felt that I got it for a very good price. I was in a total state of shock as I staggered out of my chair to do the paperwork - my heart was still pounding and it all felt quite surreal.
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| You never quite know what the selling price will be at an auction. |
Anyway, that's what happened. I now have a lot of paper work to get through for the sale and then I need to decide what needs to be done to the flat. The living room and kitchen are immaculate, but the roof garden is probably where I can spend a lot of effort (and probably money). The bedrooms could probably do with better sound insulation and some of the windows need better double glazing (again, for sound insulation purposes). The living room is huge - there is a huge dining table there now plus a games area and I am wondering what I can do with that area. Oh and I am looking into installing a hot tub/Jacuzzi in my roof garden. But overall, the property is in rather good condition indeed, the wooden floors look quite classy and the current owners have taken quite good care of it. Ironically, I lived on that street back in 1997 in my first year at university and now I'm back there!
Finally, I shall leave you with one question: from my new place, it is going to be about a 950 meter walk to my gym (that makes it a 1.9 km round trip). That should take 13 minutes or so to walk - but what do you think I could do to make that walk faster? Should I get a pair of roller blades? Should I get a micro-scooter (or would I just look silly on it)? Or one of those self-balancing electric hoverboards? Segways are not allowed on public roads in the UK I'm afraid. Short of getting into the habit of jogging, how could I get to the gym and back? Answers below please, many thanks!
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| More space for me and my plants - yay! |
How about this http://uniwheel.co.uk/
ReplyDeleteThat looks so cool! I will seriously consider. Thanks.
DeleteYou're welcome and congrats on snagging a property at a good discount :)
DeleteHey Limpeh, apart from the good price and good condition of the apartment, just a question, how do you know that the estate agents are totally independent from the auction? Perhaps they might have over estimated the true value to make you feel it was a good buy? How do you ensure this will not happen? Never bought property before so just wondering.
ReplyDeleteHi John and thanks for your question. When you are investing over a million dollars (well, Singapore dollars) into a property, you don't buy on a whim the same way you may pick up a bag or a pair of shoes at a sale just because it is cheap. You do your own homework to ensure that you are making a sound investment. In this case, we got the opinion of two independent experts to look at the property on our behalf to give us an independent evaluation of the true worth of the property - this is measured up against other properties recently sold in the same area and they also factor in the condition of the property. All that is based on experts' opinions and both of our experts reached the same ball park figure (well, they were within £30k of each other, but when you are dealing with such big numbers, it was pretty close indeed). We even went into the history of the building, dug up old records from the Land Registry to find out exactly what the building had been used for since it was built and I have a huge Dropbox folder full of documents.
DeleteThe fact is, I have worked in sales so I am especially wary of salespeople who just want to close the sale and get their commission. So when I make a decision on an investment that is worth nearly 2 million Sing dollars (count it John, that's S$2,000,000 - how long does it take you to earn that kind of money?) - surely I would be extremely diligent when it comes to the kind of homework I would do to ensure that I am investing my money wisely? In fact, no, I don't even trust myself to do that kind of homework when we're dealing with this much money - I am getting the best industry experts to do it on my behalf so I am trusting their opinion.
Here's how you calculate the approximate value of the property: you take into account the neighbourhood of the property + the condition of the property, that gives you a magic number of how much it ought to cost you per square feet. You then simply multiply the magic number (cost per sq ft) by the area and you get an estimation of the value. This should be done by experts who can go through volumes of data of say of all the properties sold in that post code this year and that gives you a pretty good idea. As for the condition of the property, that's for you to check when you visit the property before the auction. Anyone searching for property to buy will visit loads of properties and we know what to look out for.
In fact, I did try to do my own research to double check the figures that my two experts gave me and I reached a similar figure as well in the same ball park region. These independent experts I hired have absolutely nothing to do with the auction house and they certainly do not get any commission to from "making me feel it was a good buy" - no, they have one job and that is to tell me what the true value of the property is. I got 2 of them to do it so in case one of them makes a mistake, then I will know if there is a big difference between their two estimates. In fact, one of them is such a famous expert in London that he has a reputation to protect (I've known and used him for years) and no, he doesn't make stupid mistakes. Certainly, he will never do anything as stupid as inflating the price just to "make me feel like it was a good buy". No, why the hell would he do something as stupid as that? Thankfully, I am using one of the best experts in London and I trust him.
In short, I make sure I don't make mistakes by getting experts' opinion (paying them if I must) because I don't trust my own opinion. When you are making a multi-million dollar investment, you don't make mistakes by cutting corners. And this is not my first property investment, it's my 5th in fact.
In fact the expert who is a close friend of mine, the one I have known and used for years, has warned me against bad property investments before. The guy is a genius and one of the best in London - the fact is we are friends too and that kind of trust actually means a lot to me. In life you have got to be able to trust some people and I choose to trust him.
DeleteI am really happy for you! Congratulations :)
ReplyDelete