I have made and published a few videos on my YouTube channel about buying property at BidX1, and other online, auctions.
A small number of people are critical of such purchases and such auctions because they involve repossessed properties in the main, with the sales being carried out by receivers on behalf of the lender who appointed them.
Comments from the tiny majority along the lines of accusing purchasers of such properties from profiting from another’s misfortune, you will never have any luck, karma will come back to bite you, you are part of the problem etc. etc.
I disagree fundamentally with these comments.
Firstly, the vast majority of such properties are not family homes but investment properties bought by investors. Investors who were unable or unwilling to repay their loan.
If you are an investor, and you borrow money from the bank to finance an investment property, and you put up that property as security and you then do not repay the loan, what do you expect will happen?
Of course the bank must be allowed to repossess.
There are many reasons for this but the most important one is to ensure banks will lend money to others for family homes and other purposes.
Another reason is to ensure competition in the banking market. Nobody will participate in a market where they are not legally allowed to foreclose on an asset that has been put up as security by a sophisticated, experienced investor.
Secondly, there is a criticism that buying a BidX1 property somehow reduces the supply of houses for young people trying to buy their first home.
Nothing could be further from the truth.
BidX1 properties, when they go to auction, are not suitable for first time buyers because they only suit cash buyers. Two weeks’ closing date, imperfect property, imperfect title, limited information or warranties from the receiver all mean that these properties are only suitable for cash buyers.
But when the investor/cash buyer buys and remediates his property he/she will make it available for renting or for sale. Thus, increasing the supply of properties for rental and/or sale.
This is how the world works.
So, the idea that buying a repossessed property is a bad thing or is morally questionable is completely untrue.
I would argue that the opposite is the case to ensure a health supply of properties and capital to a functioning property market.