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Inside A Property AuctionWhat Investors Should Know About Property Auctions Before They Buy

Bidding on properties at auction can be addictive and exhilarating if you can get the property you want without someone else driving the bidding price up and out of your pre determined budget.

TV programmes like “Homes Under The Hammer” have created a real appetite among novice property investors, but can TV shows really give serious investors an insight into what really happens at a property auction, and what are the real processes involved with bagging a property bargain?

There is usually a wide choice of property types available at a property auction, and property purchases can be conducted with speed, price transparency and certainty of sale plus there is always the chance to bag a real property bargain every now and then, which could explain why so many people are looking at property auctions to provide them with suitable investment opportunities.

In order to be successful at auction, investors should have done thorough due diligence on the properties that they are interested including surveys and the interior of properties should be viewed wherever practical.

Serious property investors should be properly prepared prior to entering the auction room and ready to act quickly. It may appear to be a little daunting and overwhelming to begin with, but with practice and conducting the correct due diligence, you will soon be bidding to purchase properties at auction.

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As a landlord did you know that there are legal requirements regarding tenant’s belongings or that the landlord is legally obliged to provide storage solutions for personal possessions for a period of time following abandonment?

The subject is commonly discussed by UK landlords and usually centres on personal possessions left in rental property and what to do with them.

Frequent scenario’s include:

  • Tenants complaining that the landlord has seized their belongings and refuses to give them back until they pay overdue rent money owed.
  • Landlords asking what to do with a tenant’s personal belongings when they have left the property.

A landlord cannot by law withhold a tenant’s personal belongings in lieu of any monies owed. If a tenant owes rent to the landlord, then the correct way to recover the sum is through the county court in possession proceedings or as a separate action for a money judgment.

If a tenant leaves their belongings in the landlord’s property, as harsh as this may seem a landlord is under a legal obligation to take care of tenant’s possessions.

Protecting, removal and storage of uncollected goods can result in extra costs that the landlord doesn’t want but the Torts (Interference with Goods) Act 1977 does provide some guidance.

The same law covers both situations.

There used to be a law called ‘Detinue’ that allowed landlords to hold on to personal belongings when a tenant owed them rent, but this was abolished by the Torts (Interference with Goods) Act 1977

The landlord may have a legal obligation to protect, remove and store a tenant’s possessions resulting in extra costs that the landlord doesn’t want but be advised that if a tenant appears to have abandoned their belongings, it could be argued in court, that the goods left could be evidence of the tenants intention to return and therefore the property was not officially abandoned.

This can be a real headache for landlords who often change the locks on the assumption that the rental property has been abandoned. However, if the tenant subsequently turns up, the landlord could be considered by the courts, to have illegally evicted the tenant. So landlords are urged to act cautiously.

It is good practice, when signing up a new tenant, to collect alternative contact details of relatives or friends who a landlord can contact in the event of having goods left in the premises.

In theory it is possible to insert a suitable clause into a tenancy agreement to set out contractual obligations regarding this, but it is advisable to use a formal notice of collection of goods as well to avoid any possible come backs.

In the event that there is a dispute about ownership of the goods that are left, landlords cannot dispose of goods until the matter is resolved.

If the landlord intends to dispose of the goods left in a rental property then, by law the landlord must give 21 days notice before disposal. If the tenant owes money to the landlord BEFORE service of the notification then the landlord is obliged under the law to keep the personal belongings for at least 3 months before sale or disposal.

The landlord is entitled to sell the goods and keep any reasonable costs that were incurred for storage, removal or sale. The law expects the landlord to obtain the best price they can and then return the amount beyond the landlord’s costs to the tenant.

It is unlikely that tenants absconding or abandoning rental properties would leave expensive items behind, usually it is just junk or old clothes and broken furniture so the likelihood of recouping funds owed through the sale of items is often slight in most cases.

The landlord requirements on this matter may seem particularly onerous but this is just one of the many frustrations faced by private rental sector (PRS) landlords, it goes with the territory. Landlords can make good money but it is not necessarily easy money and the protection of a tenant’s goods is just one area where landlords need to operate within the boundaries of the current legislation.

The volume of scheduled foreclosure auctions reached a nine-month high last month, suggesting that in early 2012 more homes in USA will be seized by banks or offered as short sales, in which lenders agree to accept less than the balance of a mortgage.

Although highly unfortunate for the victims, the distressed nature of the foreclosure property market in the USA presents purchasers with a unique opportunity to buy bargain priced properties in USA.

James J. Saccacio, chief executive officer at RealtyTrac said: “The first quarter typically is a better buying season, so you’ll see more of this inventory try to come to market.

“I expect 2012 to look similar to 2011 in volume if nothing changes with government intervention or regulations.”

Fresh figures provided by RealtyTrac, which publishes the largest database of foreclosure, auction and bank-owned homes, shows that a total of 224,394 properties received notices of default, auction or repossession last month.

RealtyTrac estimate that the U.S. housing market must digest over 14m distressed homes before the foreclosure crisis will improve. This includes around 1.5m homes in the foreclosure process, 3.5m with delinquent mortgages and at least 10m “underwater” properties.

Nevada led the nation with the highest foreclosure rate for the 59th straight month even as foreclosure notices fell 43% year-on-year, according to RealtyTrac.

California had the second-highest foreclosure rate, with one in 211 homes receiving a filing in November.

 

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Whilst UK banks remain awash with loans made against sub-prime property – a legacy of irresponsible lending during the years leading up to the 2007 financial crisis. The UK’s largest commercial property market lender, Lloyds has been particularly active in trying to reduce its exposure to the volatile sector.

Lloyds Banking Group has been considering bids by dozens of private equity groups, opportunistic buyers and pension funds following the launch of distressed real estate loans three weeks ago.

The banking group now seem set to accept a loss of about 35% on up to £1Billion of commercial property debt as it continues to negotiate with up to four remaining bidders for the portfolio.

Initial bids for the distressed portfolio of loans were tabled at almost £650 Million (GBP) or $1 Billion, a price that would represent a 35% discount to the loans’ face value.

Lloyds hope that accelerating the process could mean that the sale could take place before Christmas this year.

The sale of a portfolio of loans marks a step change in Lloyds’ strategy. It previously only sold individual loans. The move could signal a more aggressive push to deleverage its balance sheet. Lloyds’ overall ambition is to unwind the £24bn worth of bad property loans it holds.

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