More property auctions on the horizon for UAE
IT SEEMS the only way is up for the Dubai property market. After news headlines last week were reeling of a Downtown property going for double its base price at public auction in Dubai, it seemed the country had picked up bidder’s fever – property auctions, once an unsuccessful relic harking back to days before the recession had hit the UAE, were back in full force for buyers in the region.
Don't believe the hype
But don’t be fooled by the hype, said Mario Volpi from Cluttons live on The Property Show on Dubai Eye this afternoon. Whilst the property did sell for Dhs 1.349 million, almost double its Dhs 700,000 reserve price, such a low holding fee for a 1 bedroom property in Downtown was no coincidence. Mario pointed out that this was, in fact, a clever marketing move made by the seller – attract crowds with an outrageous ‘bargain’, and the competition of the auction room will do the rest to make profit.
Auctions had faltered in previous years in Dubai due to the poor property climate and a failure to build hype, but it would seem with sensationalist media coverage and ‘rock bottom’ prices such as the one mentioned before, vendors have learned from their mistakes. These auctions are fast, ferocious and (sadly), far from frugal.
How to act at auction
As always, cashy is on hand to give you the information you need, so here were Mario’s tips on attending (and even buying) at auction:
Have a budget in mind – and STICK to it! Many people arrive at auction with a figure in their heads and allow themselves to be swept up in the drama of the auction room, thinking ‘Oh it’s only X amount over my budget…’ and lifting their paddle in a whirlwind of adrenaline. Write down your figure if it helps you, take along a trusted friend who will tell you when to bow out gracefully, but make sure above all else that you know what you can afford. Buyer’s remorse is never more prevalent than after a heated bidding war.
Remember why auctions happen – The vendors at auction are usually banks trying to regain the full amount of a mortgage that has fallen through. The house becomes repossessed and the bank wants to sell it on, losing NO money in the interest of protecting their shareholders. A vendor can always choose to back out of an auction if the bid does not match the price they wanted to receive for their property. Keep a level head to avoid disappointment.
Go in with eyes open – Bidding at auction means you have made a decision to invest and you have the full sum of your bid ready and accessible, to move to the vendor on the day. If you are buying with a mortgage the process becomes infinitely more complicated, and to protect yourself it may be wiser to still use the traditional route of using an agent.
Pic credit: freedigitalphotos.net
Have YOU ever attended a property auction? How was your experience? Share with cashy below!