Buying and selling property at auction
PUBLISHED: 19:28 24 February 2014 | UPDATED: 19:45 24 February 2014
Selling a property at auction definitely has its benefits, as long as it is the right sort of property, says Chris Coleman-Smith, auctioneer at real estate adviser Savills
Buying at auction.
The overriding benefit of buying a property at auction is that you walk away on the day fundamentally knowing that you have bought a property. Any of the associated time uncertainties which often occur during a private treaty transaction do not apply. Exchange of contract happens as the gavel comes done and completion usually occurs four weeks later.
As a purchaser, you will not be subject to a shift in market conditions, whereas, in the private treaty market, if the purchase falls through, you may lose out by as much as five per cent in just a few months – especially in the London area market where prices are rising so quickly.
Auctions provide a good cross section of properties. Because of the variety of property available, the choice of property at auction is often more variable than one would expect to find through an agent. There are investment opportunities, vacant properties, properties you can add considerable value to, as well as plots of land – providing plenty of scope for a range of different buyers.
However, the flip side is that you need to be organised with your finance. You have a fairly short time scale in which to get the money together and get a mortgage and survey in place and this can often be quite nerve-racking. You have to be professional.
Selling at auction.
Selling at auction provides access to a wide variety of purchasers, ultimately ensuring the best possible price is achieved. But this will only work for a specific property type. The reason being that properties which are refurbished and well-presented tend to be more price sensitive. They tend to be marketed by vendors who will often be less flexible on the reserve price, making it difficult for such properties to be successfully sold at auction.
It is a view shared by Nick Ingle, head of Savills Harpenden sales, who said, ‘For residential properties in good condition, the most effective way to sell successfully is to seek out an agent who can advise on the value of comparable properties, market it fully and, where there is multiple interest, achieve the highest possible price.
‘The time which is not afforded to purchasers at auction can be beneficial in the private treaty market. In most cases, there will be an occupied vendor who is able to offer knowledge, help and assistance on the property in question. There is time to obtain a full survey (indeed, all mortgage companies will insist on this), which will give an insight into the structural condition of a home – this is not the case at auction.
‘Purchasers are also able to make an offer without it being conditional, so there is time to undertake due diligence, and ensure the property you are about to purchase is all you want it to be.’
Both central St Albans properties pictured were sold at Savills auction in October. 17 Alma Road, a mid-terrace building arranged as four flats (three flats vacant, one flat let on a regulated tenancy). Reserve was £525,000. 7 Alma Road, a two-bedroom mid-terrace house on a regulated tenancy. Investment let at £7,740 per annum. Reserve was £135,000.