A perfectly good, modern apartment on the outskirts of London is about to be sold at Auction for 5% of its true market value. Surely there’s a catch? ...

The apartment in question is certainly worth its GBP 180k ‘true market value’ estimate, let alone the GBP 9k it is likely to sell for at auction in the next few weeks. Located in the popular commuter town of Woking, thirty miles to the west of London, It has two decent sized bedrooms, a spacious lounge and a fully-fitted kitchen. It appears to be in good condition and whilst it is far from exceptional, it is typical of the thousands of homes that have sprung around the UK’s capital in the last thirty years.

Records show that its current owner bought it for GBP 126k in 2001 but quite why she should accept a bid of less than GBP 10k for it six years later, takes a little more explaining. The brains behind the seemingly unfeasible scheme are Asmat Monaghan, a former IT boss for private healthcare provider in the UK, and her daughter Amberine, the apartment’s owner.

The family, who moved from Scotland to southern England in 1994, had always worried that their daughters would never be able to afford to get onto the Property ladder. “Luckily, we were able to get them there with some savings and some loans, but that's not the case for all young people,” says Asmat. “Many of those who graduated with Amberine have moved back into their parents' homes to save up a deposit but the prices are just accelerating out of reach. I kept thinking there must be a cheaper way to do this."

The idea for their online property auction site, humraz.com, came when they were on a family holiday to India some years ago and stumbled across a televised auction in which the lowest unique bid won the items. There was a fee for each bid. Once enough bids had been cast to cover the price of the lot, laptops worth GBP 1k were going for as little as one pound.

"This was all electronic items, which depreciate," says Asmat, "but nobody was doing it with property. We realised it could work. No one individual would be covering the cost of a property which would otherwise have been out of their reach.”

Combining Asmat's background is in IT and management consultancy with Amberine's training in law and accountancy, they were able to put the business together quite easily. Then when Amberine was bequeathed her grandfather’s house, they decided they would test their model, by auctioning her apartment in Woking. "We wanted to be completely certain of handing over the property without any problems," says Amberine.

“Our first problem was convincing the public that the site is legitimate. We've been surprised by the suspicion. We're doing everything by the book. My husband is the type of man who can't even cope with a red utility bill, we're that cautious about everything. We can't access the data while the auction is live so there's no way we could fix it. Plus we found an Ofcom regulation which says this is a genuine auction because people bid competitively and a payment is made for each bid."

Whilst legitimacy was one problem, an equal obstacle to success was explaining the concept to the general public. "People do still have a problem understanding it," they admit, "although it seemed really obvious to us. But we thought people might find it easier to grasp if there were items of smaller value on the site."

So they decided to start with something, which, like property, was perceived to have a solid non-depreciating value. They opted for gold bars. So far, as part of their public awareness drive they have sold three, one of which, worth GBP 1,300 went to a man who made just one bid - for a penny!

The Humrazzers wince at the suggestion that they are effectively running a lottery. A comparison they don’t feel to be accurate because when a person bids they are automatically informed as to whether the current winning bid is lower or higher than the one they have just made. "I think it's far more skill-based than a lottery. You can work out how to position yourself," says Asmat.

"I suppose some of the skills are poker-based. For a bidder to position themselves with any degree of accuracy they'd probably have to bid a few times at 3 pounds a go. I envisage one of my home-hungry friends bidding 12 pounds a week to stay in the game – 12 pounds a week that might be better saved towards a deposit. This is, after all, a form of gambling.

"You could put together a syndicate," says Asmat, "and that would increase your chances. You could then end up sharing a property or selling it and splitting the profit for a group of deposits. If we did get to a point where we felt people were gambling too much, we would try to contain the problem."

Ass a show of good will, they'll donate 2.5 per cent of the GBP 180k value to charity when the auction's completed.

They added that the £3 per bid fee is small compared to the costs incurred by participants in a traditional property auction. "We researched the cost of the professional services generally conducted prior to property auctions, such as lawyers and surveyors," says Asmat. "Pre-auction fees can cost upwards of £1,000 – with no guarantee of winning the desired property. For every auction winner there will be at least one other losing bidder who effectively wastes a significant chunk of their nest egg. Based on a conservative estimate of two disappointed bidders per lot and 60 per cent of those bidders spending £1,000 on pre-auction surveys, legal checks and mortgage arrangements, we calculated that £21,963,600 was wasted in 2006."

The will be required to pay legal fees of around GBP 600 on the transaction and whilst for reasons of practicality bidders are not afforded the privilege of inspecting the property before placing their bets, sorry, making a bid, they do have the right to withdraw after they have won should they so desire.

In the event of there not being a unique lowest bid, the auction is won by the first person to have bid at the lowest figure with the fewest bids. A minimum number of bids have to be placed for the auction to go ahead – as they have to at least cover their costs. If that doesn't happen, the flat remains unsold but the winner will receive GBP 3k plus their bid money back.

Bids can be made in a variety of ways including through the website and by phone text and they cannot say for sure how many bids they envisage being required.

If all goes according to plan, Asmat and Amberine expect to have handed over the keys to the apartment for less than GBP 10k, by the time you have read this article. To be sure though, just log on to www.humraz.com and see for yourself. You never know, you might be lucky. And if not, well rumour has it a GBP 400k property has already been lined up for the next auction.