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The £425,000 garden flat that could be bought for just £75
Sri Carmichael31.10.08
THIS is the garden flat you could buy for as little as £75 in a radical new form of online auction launched today.
The seller of the two-bedroom property in Stanhope Road, Highgate, will still pocket the asking price of £425,000.
Sam Grief, 39, opted for the unusual method after struggling to sell the flat for more than a year, despite knocking £125,000 off the price.
Bidders will be asked to pay £75 for a place at the virtual auction. It will only begin once enough people have signed up to cover the property's value plus stamp duty, commission for the auction website and a charitable donation.
The home will be won by the person who offers the lowest price not the highest. Bids can range between £0 and £22,400. But the catch is this: the winner must chose a figure that has not been selected by any other bidder.
The value of a property determines the number of people who must sign up to the auction to make it valid and the range of bids they can make.
In Ms Grief's case, the auction begins once 7,900 people have entered. At that point, a time will be set for them to make a maximum 200 attempts at the lowest unique bid.
Her property is the first in London to be auctioned by Humraz.com, set up by IT consultant Asmat Monaghan, 48. Mrs Monaghan, from Walton-on-Thames, said: "Everybody wins. The seller gets their asking price without the anxiety of waiting for an offer or estate agent costs, and also receives a donation to their favourite charity.
"The buyer gets a property at a fraction of its market value."
The element of skill said to be involved has ensured the Gambling Commission deems the auction a competition, not a lottery, which would require a special licence.
Ms Grief plans to donate £10,625 from the auction to the charity she works for, Business Action on Homelessness.
She told how days before she was due to complete on a conventional sale last month the deal became a victim of the economic downturn. The chain she was in collapsed after one of its members, a banker, lost his job.
She said: "It was devastating. My boyfriend and I had already moved to Bath. We committed to renting and we're completely stretched financially. It's incredibly stressful. Nothing's selling, although last summer properties like this were snapped up in weeks. We're desperate."
Humraz is now collecting pre-bookings for two house auctions in Essex and Northern Ireland.
Chris Brown, president of the national association of estate agents, said of the scheme: "I'm sceptical. It looks like a gimmick and a very convoluted way of selling a house. But if it works and is legal, that's fine."
Reader views (7)
I think it is a fabulous way of selling your property, it is NOT a lottery it is a real skill based chance at bagging a complete bargain..you get 200 shots for your £97 seat price and they don't take that until enough seats are booked. V.exciting if you win with lowest unique bid you buy it at that price ..how cool is that.. every parent should book a seat for their kids [over 18] for a Christmas present with a chance to win some thing other than using their computer skills in on line games...They even get to practice their bidding skills before the auction....
- Jill, Fakenham England
For: Andrew, London
Apologies, a breakdown of costs was provided to the Evening Standard - unfortunately it must have been left off in the editing.
To complete your calculations:
"So that's 7900 x £75 = £592,500.
seller gets £425,000
stamp duty of £12,750
donation to charity of £10,625"
Leaving £144,125 of which £114,130 is accounted for in VAT payments (17.5% per seat) and roughly £23,700 for card processing fees.
This makes the humraz commission, circa £6,295 - approx 1.48% of the value of the property.
Hope this helps clarify this area of confusion.
- humraz, Kingston -upon-Thames
"Everybody wins. The seller gets their asking price without the anxiety of waiting for an offer or estate agent costs, and also receives a donation to their favourite charity."
So that's 7900 x £75 = £592,500.
seller gets £425,000
stamp duty of £12,750
donation to charity of £10,625
That leaves a mere £144,125 to cover commission for Humraz, the auction website company.
Now I understand who wins. It isn't the 99.99% of people taking part who have lost £75 - though they may get some comfort from knowing that £1.34 of their £75 is going to charity.
- Andrew, London
I wonder if like all the other recent auctions she will be taking a 35% cut of the money no matter whether the property sells or not.
She should also be aware that the Gambling Comissiosn has stated that these do count as lotteries and are possibly illegal and existing ones have been suspended pending investigation.
Also the value is wrong, if no one will pay 425,000 for the flat then it is clearly worth less than that.
- Nick, London
How can Mrs. Monagahan say everyone wins? The seller wins, the buyer wins but 7,899 people lose.
- Dereck, London, England
£75 for a chance to win a £425,000 valued flat seems like a pretty good deal provided that the property is structurally sound. However, I guess that real gamble is wondering who is overseeing the auction, what regulation & compliance there is and guessing a bid that nobody else will go for! It's an interesting concept, for sure. If the system becomes truly successful then I dare say that this will be the end of estate agents as we know them! That might not be a bad thing really?!
- Fraser, Telford Park
Why do people think that auctions and raffles will sell their house?
People have been doing this for 20 years, and each of them think that they were the first to think of it.
Okay, this has a slight twist, but it still isn't going to work because one can never find enough people. The administration cost of this sort of scheme can end up with the seller losing even more money when they have to start refunding everyone when only a couple of hundred people signed up instead of the 5000 needed.
- George, London
