Andy Thompson, Auction Consultant. February 2016.
You’ve all seen “Homes Under the Hammer” and heard the stories of ordinary folk dipping their toe into the world of “buy-to-let” and property development, as well as those seemingly very brave people buying a property at auction with a view to making it their next home. Perhaps you’ve wondered whether it’s something you could do yourself at some stage?
Then again, maybe you dismissed the idea out of hand, thinking that the whole process is just too risky, too scary and only the domain of seasoned property experts. And anyway, you probably need to be a cash buyer to go down the auction route, right? Wrong. But more about that later.
Certainly, there are lots of things you need to be aware of when buying at auction; the considerations of what to buy and where; the pit-falls that need to be avoided; and the due diligence processes that are crucial before the fun bit (the bidding!) begins. The good news is that YOU don’t need to know all these things for yourself, or know how to go about them before deciding to buy at auction. That’s my job!
As an Auction Consultant, a role unique to Edward Mellor, I’m here to hold your hand every step of the way. From deciding where to buy and understanding your reasons for buying, to exploring the various options available, together, we can find the right buying model for you. From there, I can guide you through the process of raising finance and the all- important due diligence procedures necessary to make your investment a success. Then, on the big day, I can give you all the practical and moral support you need for the actual auction and bidding process. And after the auction is done, and the property is yours, I’m there to support you until you pick up the keys and beyond.
I’ve recently worked with a young couple who have never owned a property before and are in the process of buying their very first home…..at auction. After struggling to find the right property through the usual estate agency and online routes, they spotted a property for sale in our latest auction catalogue. We arranged to meet up on the 20th October for an initial chat, and since then, in a matter of days, we’ve viewed the property, checked over the legal requirements, sorted their mortgage and negotiated a pre-auction deal! We exchanged contracts on Monday 26th October – less than a week later!
The benefits of buying a property at auction are the speed and certainty of your purchase. Once the hammer comes down, you can’t be gazumped. The property is yours. And, as a general rule, these properties are cheaper than they are on the open market. So, whether you are looking to buy-to-let, buy to sell-on or move in yourself, buying at auction is a great way to make your money go further.
When I meet clients who are considering buying at auction, there are a number of areas on my check-list that I need to know in order to give the right advice and decide on the best property investment options.
Then, I act as a kind of “personal shopper” for my clients, finding the right property for them. Budget, risk management, end use, timescales and long term plans are all features to be considered. I encourage them to talk about their aspirations and their lifestyle and to think in terms of desired results versus the time, effort and risk involved to achieve it.
There’s a lot to think about and finding the right buying model and strategy is crucial to making a sound investment decision. Don’t worry – I can take you through all the options, all the possibilities, all the probabilities and all the outcomes to find the model that leaves you feeling in control, confident and satisfied with your property investment decision.
I help my clients to explore options they hadn’t thought of and sometimes I’ll have to reign them in from straying off down a route they might regret.
Once we have identified a property, I make sure no stone is left unturned in the due diligence process, so, come the day of the auction, you’ll know exactly what you’re buying, how much you’re going to bid up to and what your end plan is.
It’s my job to make the seemingly scary, out of reach option of auction easier, more accessible and eminently do-able! And if you’d like to talk about it on a one to one basis, please get in touch.
Maybe you just want an initial chat as a fact-finding mission to decide whether buying at auction is something you might consider in the future? That’s fine by me – I love the property auction world and am happy to talk about it at any opportunity!
And perhaps I’ll see you at the next Edward Mellor Auction at
A J Bell Stadium, 1 Stadium Way, Barton-upon-Irwell, Salford M30 7EY / M30 7LJ
Wednesday 16th March 2016. Registration from 1pm. Auction starts 2pm.
AJB Stadium, Barton-upon-Irwell, Salford, M30 7EY
(Home of Sale Shark’s and Salford City Reds).
Wednesday 3rd February.
Doors open at 1:00pm and the auction starts at 2:00pm.
Andy Thompson, Auction Consultant
0161 443 4740 / 07530 704234
The song of the same name, sung by the legendary Freddie Mercury back in the 1980s, was a reference to the Cold War at the time of its release. And whilst the auction room is far from a war zone, in its own inimitable way, it provides an arena in which many people go into battle searching for victory.
For the Auctioneer, the feeling of the hammer falling provides a great sense of satisfaction, knowing you have secured a sale for your client. For the buyer, there is the feeling of euphoria from the success of outwitting their bidding rivals to secure the property purchase for themselves. The vendor and buyer, with a successful transaction under their belts, can leave the auction room arm in arm like two gladiators exhilarated by their respective victories!
So, is the Auctioneer the metaphorical United Nations of the auction battleground, bringing rivalling parties to a positive conclusion? I believe he is! Although, for the Auctioneer, that fall of the hammer is more akin to the feeling a centre-forward gets scoring the winning goal at the end of a fantastic team effort.
Our team – the Auctioneer, the Valuers, the Auction Consultants, Viewing Representatives and the administration staff all work together to make the auction process a success for everyone. And they are always accessible and on hand to give expert guidance on all things property – to old and new, experienced and inexperienced auction clients. I’m sure this accounts for the high levels of repeat business we do.
As a generalisation, most people don’t fully understand how auctions work. The idea of selling at auction is possibly outside of your comfort zone. But you may be missing out on a great way of selling property. And the answer is for us to work closely with you, to gain your trust, build your confidence in the auction process and develop that feeling of mutual trust and respect.
Why not come and talk to our Auctioneers and the rest of the auction team? We can advise you on everything from selling, buying, finance and mortgages, right through to getting planning permission, if needed, for your property.
Our next auction is Wednesday 3rd February, so get your list of questions together, come and see us and fire away! As well as myself, you can meet fellow auctioneer, Nick Green, auction consultant, Andy Thompson, and our financial adviser, Stephen Ridgway, and his specialist team. Find out everything you want to know about buying or selling at auction and observe the action as it happens!
The new “Pension Freedom” rules have given people more choice with their pension pots. The rules only apply to defined contribution schemes (personal or workplace pensions where you build up your own pension pot). Defined benefit schemes (also known as an employer’s salary-related scheme such as a final salary scheme) are not affected by the new rules.
You need to be 55 or over to access your pension pot
You can now withdraw as much of the money as you want from your pension when you reach 55, although it is taxed as income above the initial 25%.
Your options are
• buy a guaranteed income for life – an annuity
• invest in funds designed to provide you with a flexible retirement income – called drawdown (the income is not guaranteed for life)
• take small cash sums from your pot when you want them
• take all your pot as cash in one go
• combine these options
The lump sum is tax-free on the initial 25% of your pot, so that proportion is worth taking. The remainder can be taken as a lump sum which will be subject to tax, and can be used in any of the following ways:
• pay off a mortgage or other debts, such as credit card bills
• use towards a buy-to-let property, to provide further income in retirement
• invest your cash lump sum, to provide more income in retirement
• other pros include the ability to gift the money to your family, such as helping with university fees, or being able to leave a legacy
Taking all of your pension as a lump sum could deplete or remove your retirement income options. You will not have as much money to spend on an annuity or go into drawdown, which could lower your monthly income significantly in retirement.
Having looked at the pros and cons the reality is anything but straightforward. What you need to do is seek advice from a specialist. Each case is different and each individual is different. There is no common solution. Taking your whole pension at once is a big decision. You may find that you don’t need access to all of your pot immediately or that you can defer your options to a later date. You do need to take into account all of your assets, including ISA’s, savings and investments. An adviser can look at your overall wealth and help you to make the right decision at the right time.
I’m in my 11th year here at Edward Mellor, so I’ve had my fair share of “first days back”. And they don’t get any easier.
This year was no different; I dragged my (larger) self into the office, took my first swig of an extra strong brew from my new ‘Secret Santa’ mug and set about reading 481 new emails through my bloodshot eyes.
No sooner had I opened the first spam email with offerings of gentleman’s herbal supplements, when the first phone call of 2016 came in. It was at the stroke of 9 o’clock and came from a very eager gentleman looking to buy a property “as soon as possible!”. Whilst this isn’t unusual – we are property auctioneers after all, I sensed that this chap had been waiting all weekend for the office to reopen, and the moment it did, he was on that phone faster than I could say Blue Monday. And he wasn’t the only one.
Usually our first week of the New Year is a bit of a slow burner, with people taking their time to get back in the swing of things and start thinking about property again. From the moment we reopened on the 4th January, we have been inundated with frantic property buyers desperately trying to find their next purchase(s). We are receiving offers on houses within MINUTES of them going live on our website and our valuers can’t book them into the auction quickly enough.
So why the rush?
Could it be the usual New Year motivation – the same reason that all the gyms are packed out with new faces and why I saw Jean, my next-door neighbour, shuffling past my front window yesterday evening in full Lycra? Possibly. But the difference this year and the words that are on the lips of everyone calling me is “Stamp Duty”.
On 1st April 2016, the new Stamp Duty changes come into effect, meaning many of our property investors will soon have to pay 3% Duty on their purchase for properties that previously would have been exempt. With our next auction taking place on 3rd February, potential buyers see this as the ideal opportunity to buy property before the ruling comes into place in time to beat the surcharge deadline and, consequently, our phones are ringing off the hook.
This is a unique position that savvy vendors are taking advantage of. Whilst our Auction Consultants are busy assisting these extra-hungry buyers, a growing number of opportunistic sellers are realising the unique advantage in selling at our next auction, knowing that competition to buy is unlikely to be this strong again all year.
All in all, it’s been an extremely busy and positive start to the year and I would like to take this opportunity to wish you the very best in 2016.
I’m off for a jog with Jean now!
Andy Thompson, Auction Consultant
0161 443 4740 / 07530 704234
*If you have any questions regarding the proposed Stamp Duty changes, you can call the HMRC Helpline direct on 0300 200 3510.
We ask Paul Brassington, Retirement Planning Adviser at Edward Mellor, why seeking financial advice is a wise move.
Retirement is a very long term plan and your pension is one part of your total asset wealth, so you need to look at all of your assets, including ISA’s, savings and other investments, and look to see how your pension fits in.
Other factors include your health, your preferred options on lump sums and levels of income, and the date you wish to retire. The pension is part of the puzzle and, in general, a Financial Adviser is best suited to look at the whole of the market and the available options, based on individual needs.
Retirement is a really important issue and each individual needs to have an idea of what retirement means for them. What age they want to retire, what level of income can be expected. Enjoying your retirement is key, so some planning needs to take place. As a nation we are healthier, so we can expect to live longer and potentially take more holidays, but we may also need to fund long term care costs in the future. A Financial Adviser can help plan towards these expectations and keep them reviewed.
That’s the million dollar question. In reality, you need to start with what you need and when you need it. This is where a Financial Adviser can help and you build up a level of trust. They can put together a plan looking at overall wealth, based on what you wish to achieve. But also any plans need to be reviewed as circumstances can change and there may need to be a Plan B or Plan C. Tax benefits and shelters need to be utilised, as well as investment reviews, monitoring market changes and changes in legislation. Also, health can change, so being able to adapt is important and reviews are vital.
It depends on how simple an individual’s overall wealth is. For someone with little savings whose main income is from a state pension, a simple solution might be the best solution and it might be something they are able to do themselves. It is difficult for the majority of people to do this as, whilst taking into account the tax treatment of assets, the investment choices available and the option of leaving a legacy behind, it starts to get very complicated to try to do it yourself, and there is the risk of making a wrong decision.
Exactly. You could end up with the wrong outcome and that could impact financially on you and your family, your lifestyle in retirement, and any potential legacy in the future. I believe that seeking financial advice adds value if done in the right way with the right financial adviser.