Auctions can be a great place to find interesting and unusual items of furniture, collectibles and jewellery and also to pick up a bargain at the same time. Be it in a traditional auction house or via one of the increasingly numerous online auction websites, there are gems to be found and don’t forget, cash to be made if you wish to sell. One man’s junk is another man’s treasure and all that…If it’s larger items you need to furnish your house then rest assured that you can find more than antique or 1930’s ‘brown’ furniture. Many auction houses sell brand new, end of line, bankrupt stock from well-known high street retailers at a fraction of the cost in-store. You could pick up a new leather sofa for under £300 or an end-of-roll length of new carpet for next to nothing. All that’s needed is a bit of traipsing round on the day before the auction to view the current week’s stock.Of course antiques are found at most sales but if you are looking for a bargain then exercise caution, inspect the item you are interested in thoroughly before bidding and always set yourself a cash limit – and don’t exceed it! Remember that you will not be paying the hammer price for the item you win, but a buyer’s premium (typically around 10-15% on top of the hammer price) plus VAT. Also if you are buying an item which is too big for you to transport yourself, you will need to add a delivery charge on top – all this can mount up and must be taken into consideration when you are deciding your limit.Older furniture, while from a distance attractive, can have hidden flaws; woodworm, sticky drawers, missing beading or inlay, broken locks. These problems are all easily reparable if you have the necessary skills and time to sort them out but if not perhaps it would be a safer bet to pay a little more for an item in better condition.Online auctions are great for finding a cheaper price for a standard item or for selling your old records, CDs, kid’s clothing and other household items as you will be reaching a global audience of thousands – impossible in a traditional auction room. However if you are purchasing you will be relying on trust – you cannot inspect the item beforehand and have to rely on the reputation of the seller for dispatch and correct description of the goods. You may also find yourself competing with many other people for a desirable and rare item so that it’s price reaches a premium.Most of all, buying at auction is fun – and you can usually rest assured that you have an item which is unique or at least a bargain!
The 3 rules of auction buying, I’ve been told, are PREVIEW, PREVIEW, and PREVIEW. After nearly 50 years of collecting, I have to agree with that statement. Almost all auction houses are selling their items “as is where is” and it is up to you to assess the condition of the item of interest. So allow plenty of preview time. Some auctions allow previewing the day before the auction. This provides an opportunity to research your items of interest to see what you should be paying for it. Many collectors believe that they are buying “wholesale” at an auction. But I have seen so many items sell for well over their retail value that I would disagree with that assumption. Keep in mind that the article is simply going to the highest bidder, and if there are 2 people who really want the same item, it can go incredibly higher than it should have.I arrive as early as possible and preview preview preview. What has worked for me is making a list of the items that I am interested in purchasing and what I am willing to pay for them. Otherwise, “auction fever” can take hold and you end up bidding on things you haven’t previewed properly. It has happened many times to me; auction fever takes hold, and I buy something that should have simply been given a decent burial at the junkyard. No matter how long I’ve been in the antique business, I am always learning, and occasionally “re-learning” the same lesson.Always keep in mind that a commission, known as the buyer’s premium, may be added to your item purchase. Where I live in Upstate New York, the buyer’s premium is usually 10%. So, for example, if you are the high bidder and get your “treasure” for $100, remember that it is really costing $110. We have auctions in this area running from NO BUYER’S PREMIUM to 10% BUYER’S PREMIUM IF PAYMENT IS BY CASH OR CHECK AND 12% BUYER’S PREMIUM IF USING A CREDIT CARD. Some auction houses have even higher buyer’s premiums so always check the auction ad to avoid “surprises”.
What it is: Now that there are many more flats and apartments being built than houses, leaseholds, once rare, are becoming ever more common. All apartments in blocks are sold leasehold as to have a freehold property means that you own the land on which the property is built; clearly this cannot happen with a third-floor apartment, for instance. All leasehold properties are owned by a freeholder; that is, somebody who owns the whole building, and who leases out the separate apartments to the leaseholders. But freeholds frequently change hands, for a variety of reasons.The initial freeholder or developer may have gone bust, they may have died, or they may have tired of the business of collecting ground rents, service charges and so on. It is possible to buy the ground rents off the freeholder and so own the building. This business is only going to grow as ever more apartment blocks are created.Pros: Ground rents and freeholds are often sold extremely cheaply. You see investments being advertised for as little as £4,500. But the collectable ground rents may only come to £300 a year. People who buy ground rents and freeholds usually view them as a very long-term investment, and as their business. It’s no use just buying one; you have to own a lot to make it work. The main reason why people buy ground rents is that when all the leasehold interests of a property run down, the buyer of these rentals now owns the freehold. In practice these days, leaseholders are likely to get together to collectively enfranchise – buy the freehold between them – and in order to do this, they have to negotiate with the person who owns the rental interest. The shorter the lease, the more the owner stands to gain from selling the freehold.The whole business is subject to extremely complex calculations and legal processes and either way, whoever owns the ground rents stands to gain – eventually. When you buy a property, you are buying this element only and not any other covenants that may affect the building. You are simply buying the covenant to pay this rent. First of all, you have to obtain an application pack from Land Registry containing forms GR1 and GR2, or they can be downloaded from the internet. Then you have by law to give the tenants in the building the right of first refusal before going ahead with the purchase. To make it worthwhile, you would need to buy ground rents of properties with leases of 80 years or less; the shorter the lease has to run, the more it becomes worthwhile to consider buying the ground rent element of the building.There are now many companies that buy up ground rents; this is a specialist area and one, really, which is not highly recommended for the amateur. The business of buying ground rents is best left to the seasoned property investor who has, maybe, started off by buying and selling their own home, graduated to buy-tolet, buying at auction, and gradually become more confident and experienced in the kind of property investments that ordinary people do not readily understand. Very often, companies or individuals buy up ground rents with the intention of increasing them once bought, as some properties are nominal and are charged on a never-increasing basis. Some properties can be as little as £25 or £50 a year.Also, nowadays people are buying up property to make money from enfranchisers – that is, the ever-increasing number of leaseholders who collectively buy their freehold. When enfranchising, leaseholders must compensate the ground rent holder for the total income stream he or she will lose and the present value of the ownership he or she would have secured when the leases expired. As you can see, buying rentals can be a very complicated business and those interested should take advice from a lawyer, or a company such as Rosetta Consulting, which specializes in real estate and enfranchisement law.