0131 Property Auction has been designed with the sole intention of bringing together both buyers and sellers of local property within Edinburgh, Lothian's & Fife. We are different in many ways from traditional property auctions who mainly only sell Bank repossessed, distressed or unattractive property to ‘investment buyers’.
Our aim is to give ordinary people the opportunity to buy and sell property out-with the historical traditional route via Solicitors and Estate Agents at offers over, offers around or fixed price.
History tells us this past route of buying and selling property may have worked well then but that does not mean that it will work well today, or in the future. We believe there has to be a better way to buy and sell property in this modern technological age and the old traditional routes of buying or selling via Solicitors and Estate Agents websites is fast becoming a thing of the past, as it just does not work like it used to. The facts speak for themselves... did you know that nearly seven out of every ten properties (Nearly 70%) on the market in 2011 were failing to find a buyer at the price advertised for sale? Property selling is progressively becoming more and more difficult to achieve quickly.
Most people do not realise that owning property is very similar to owning shares in a stock market Company. We all know how shares can rise and fall and within the last few years alone we have witnessed some major high street Companies come crashing down to earth in value. Royal Bank of Scotland lost around 98% of its share value between 2007/ 2008 and even today their shares are valued at less than 10% of what they were in 2007. The national house builder Barratt is another Company that fell in value between 2007 and 2008 by over 95% and today still only hovers around less than 10% of its value compared to its 2007 high. If you think property owners have had a tough time with their house values going down since the peak of 2007 then spare a thought for the unfortunate share owners of the above Companies as every one of their £’s invested in 2007 are worth less than 10p each today! So just like Company shares property values can go down as well as up, but we all hope by not as far a percentage drop as some of these Companies shares have done recently.
However, property is not the same as owning shares, it is only similar. Property has an intrinsic value, that is land will always cost ‘X’ amount and building materials and labour will always cost ‘Y’ amount, so there is a limit as to how much property in general can fall in value (X + Y = intrinsic value). If property drops to its ‘cost to build value’ then that is where it should find its bottom about, which we believe is roughly 35% lower than the cost of a newly built house at the 2007 market peak.
This brings us to an interesting conclusion... Most people purchasing property in today’s property market are either moving up the ladder to a larger house/ better area or getting on the ladder for the first time. A very low percentage are actually cashing their chips in and walking away from property buying in the future, except maybe buy-to-let landlords who own more than one house. Well let’s imagine that your present property went down by say 20% in value overnight but the property you were looking to purchase/ upgrade to went down by 20% in price too. Who do you think would be out of pocket? Let’s do some basic maths:-
The property you want to sell value now: £150,000, -20% = £120,000
The property you want to buy value now: £200,000, -20% = £160,000
So theoretically, if all property went down by 20% overnight you would lose £30,000 on your existing property when selling but have a saving of £40,000 from the purchase of your next property. Instead of the first time buyer being priced out of the market like they are at present they would be able to step in and buy your existing property at £120,000 much more easily than the £150,000 previous price tag. The person who sold their £200,000 property at £160,000 to you could go on to buy their next £300,000 property (at 20% discount) for only £240,000, which would not equate to losing £40,000 from their existing house sale but saving £60,000 from their next purchase. So as you can see as long as you are planning to stay on the property ladder then a drop in your property value could actually be a good thing, if the property you were purchasing went down by the same percentage as the one you were selling!
As you can see, as long as you are planning to move up the property ladder, and all being equal, a drop in property values is the very thing that is needed to get people buying and selling houses once again. Don’t forget by not having the first time buyers on-board at the bottom of the home purchase chain the vast majority of people who want to sell will not be able to. Lower house prices are good for everyone, apart from investors with multiple properties and people planning to flee the country, but these are the minority and everyone including the present government know that a minority will not be allowed to rule!
The solution to peoples present and future home buying and selling problems is very easy to understand and it’s also very easy to see how the problems came around in the first place with the ever increasing home values getting further and further away from people’s affordability and finally the Bank’s asking for bigger deposits against mortgages. Even with the old and new Government’s trying their best to help first time buyers and the Bank’s being ordered to lend more money the property market has become worse for sellers. It’s presently a 'stand-off and staring game' between property buyers and sellers, and it makes no sense at all as the majority of hopeful property buyers just can’t afford to buy! The sellers have to see sense and ‘blink’ and reduce their property value expectations and they have to move a considerable way down (Around 20%) for it to work. Only then can the property wheels start turning again and we can look forward to moving on in our lives and living our future in a home of our dreams and not becoming a 'non-selling prisoner' in a house we desperately would love to move from, while constantly worrying about when its value is going to stop falling and if we will ever be able to sell at the price we want.
As in the car market where people are constantly upgrading their cars to better and more expensive models, this in turn keeps the used car market alive and well. If new car costs went up so high that everyone stopped purchasing a newer/ better car than their last one and hung-on to their existing car for years and years the whole used car market would disappear overnight. If people are offered a better car than their last at a good price they buy, and don’t mind taking a bit of a loss on their old car when they sell because they managed to achieve a good price on their new car purchase. The same rules apply to property! When the people wishing to sell their property within the middle to top end of the market reduce their asking price they will sell a lot easier and quicker, that in turn will cause a domino effect for the person down the chain (Their buyer) to reduce their asking price when wishing to sell quickly and so the lower costs of property purchase are free to filter down the property chain right to the first time buyers, exactly where it is required if property is going to keep moving/ changing hands as it did previously.
We believe Home Reports are the best thing that ever happened to property in Scotland! Now home buyers can see exactly what condition a property is in and its true valuation without the need to have a costly Survey carried out first. We are surprised the old system of needing to have a costly Survey carried out by every interested property purchaser prior to offering an ‘inflated offers over price’ survived for so long. Now that Home Report Surveys are law it is completely transparent to both property buyers and sellers exactly how much a property is worth and the properties condition has been professionally inspected and reported upon. Everyone is now playing on a level playing field.
All property placed upon 0131 Auction website for sale will be available to bid upon below the Home Report valuation and properties will receive bids from the starting price. Please remember this is a ‘starting bid’ area only and properties which are desirable for one reason or another will always be popular with auction bidders and should achieve a good price and will climb closer to the Home Report valuation. All properties placed within 0131 Auction will have a ‘reserve price’ decided upon by the seller prior to listing; therefore their property will never be able to sell below the minimum price which they have pre-set their reserve price to be. As sad as it may be however, some properties may not even make a bid within the auction due to there being no interest in them for various reasons at the price offered. These property owners will have to re-think their selling strategy and if possible address the non-selling issues which their individual property has.
One of the best thing about 0131 Auction is selling your property is COMPLETELY FREE!!! We do not charge the sellers a single penny, ever! You can rest assured that the highest bid received at auction is 100% the amount you will receive for your property from the buyer, GUARANTEED!!! Because 0131 Auction charges a small reservation fee of only 2.5% from the buyers of auction property, we are able to offer all sellers a completely free service... Now isn’t that a pleasant change from the traditional High Street Estate Agents way of doing business?
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