Whether you looking to buy or sell a property it is well worth looking at property auctions as each year thousands of commercial and residential properties are bought and sold this way making auction popular with individuals and investors alike. A significant benefit of auctions is their speed, you can go from listing a property to exchanging contracts within 4-6 weeks. Historically properties with “issues” ended up being sold by auction, mainly those needing refurbishing or, for flats, where the lease term was less than 70 years but this has changed and auctions now attract investors, builders and mainstream buyers and sellers.
There are several large auction houses that offer both residential and commercial sales and most have sales in February which tend to be large sales as they are the first of the year, after this auctions are held most months other than in August. Two of the largest and best known nationwide auction houses are Allsop and Savills, both deal with commercial and residential properties throughout the UK and there is also a thriving local property auction market with many local companies so if you are considering this route to market a quick google will tell you who your local auctioneers are and best to speak to a few before committing to one to find the best fit. The auctions are planned usually 4-6 weeks in advance and the auction houses release a catalogue of properties, which are known as lots, which are sent to potential bidders around a month before the auction date although some leave it as late as 2 weeks before to ensure that any late entries can be included. All lots are also listed online.
The auction catalogue and online listing will show the guide price which is the price the auction house thinks the property is worth, a word of caution is that this is usually lower than the price an agent will quote but the rationale is that the guide price is set at a level to generate interest and a good auctioneer will be able to work the room and increase this. There is also a reserve price, this is not listed and is usually only known by the seller and the auction staff as this is the minimum price at which the seller will sell. While it can be the same as the guide price it doesn’t have to be and if it is not reached the auctioneer will not sell the lot. If this happens, assuming that anyone in the room was bidding, the auction house staff will go and find the bidders to try and agree a sale and after the sale the auction houses publish a list of unsold lots and many properties that did not sell in the room are sold post auction in this way.
The guide and reserve prices are fluid and often will only be finalised when the auctioneer is on the podium as only then can the auction staff gauge the mood of the room and how the sale is progressing. If lots are flying over their guide prices, they will be increased and vice versa but an auctioneer will not sell a property for less than the price the seller will accept but over that amount they have flexibility making the auction environment fast paced and vibrant. If you’ve not experienced an auction before, it is always a good idea to go to one before you want to buy or sell so you know what to expect, the speed is what surprises most auction newbies as it’s not uncommon a property can be bought and sold in less than a minute!
There are a few practical tips I’ve learnt over the years having bought and sold many properties at auction both as an investor and for clients, the one I cannot emphasise enough is to move to the back of the room when you are about to bid on a property or when your property is about to be sold for the very simple reason that you can see what is happening and who else is bidding as sometimes sellers can bid against buyers to drive up the price of their property and it’s not unheard of for a seller to end up buying their own property back. I’ve been known to stand on a chair when I’m bidding to make sure I can see what’s going on as often the rooms are very crowded.
When you get to your lot being sold, how it works is like any other auction, when the auctioneer believes they have reached the highest bid they will ask once then twice for final bids and on the third time they ask they bring down their gavel and this act in itself immediately effects exchange of contracts and the buyer pays the deposit before leave which makes auction a fast a certain way to transact so is very appealing to anyone looking to buy or sell quickly.
If you are considering buying or selling your property at auction the team here have extensive experience of buying and selling residential and commercial properties and we will guide you through the process making it as stress free as we can for you, if you want further information on this please contact me by email.