Wednesday, 15 January 2020
Selling by Auction
Although we have been selling by auction since 1888, most sales of residential, rural and commercial property these days are by ‘private treaty’, meaning a deal concluded privately (but normally of course after public marketing), and this is the mainstay of our property agency. However, we have a long pedigree and vast experience of sales by auction and they remain a very important part of what we do and who we are as firm.
Best fit for Auctions
Auction is generally our preferred method of sale for small blocks of land, building plots, houses requiring renovation and farmland, but can also be a very efficient way to sell residential property and commercial investments. For residential property, auction can be the best option in circumstances where the seller wishes to sell within a reasonably short period of time and wants to minimise the risk of a sale falling through. This can often suit situations where the next generation has inherited their parents’ house and there is no requirement to keep it within the family. Auction offers a reasonably certain timescale to conclude a sale, which is normally within 3 months of the start of marketing. This can very much add to an executor’s peace of mind, particularly when winter is approaching and looking after an empty property starts to become a burden.
Commercial investment property is also often best sold by auction,
as generally there is no requirement for the existing tenants to vacate, so no
practicalities arise on completion, and buyers looking to buy commercial properties
for investment usually have reasonably good access to funds without needing to
link the purchase to a sale of another property.
Fixed Completion Date
Auction is rarely used for normal owner-occupied residential property for two primary reasons, one being that with a fixed completion date on the day of the auction, there is a requirement to move out on this date even if the seller has not found somewhere else to go, and secondly that buyers are normally in the position where the money from their sale is needed to fund the purchase of the next property, which makes buying at auction almost impossible from a timing perspective. All searches and legal documentation involved with the conveyancing process are completed in advance of the auction and the buyers bid on the basis of this information.
The fall of the hammer at an auction takes effect as a
contractually binding exchange of contracts, meaning that the buyer is legally obliged
from that point to complete the sale within the specified timescale, normally
28 days. The only way a sale can then ‘fall through’ is if a buyer fails to complete,
in which case normally the seller can keep the 10% deposit paid by the buyer at
the auction, and re market the property. Ensuring that the proper market value
of a property or land is achieved is paramount to a successful sale by auction.
An engaging guide price will attract a wide audience. Property or land in high demand,
such as pony paddocks, renovation projects or farmland are likely to attract
the largest audiences. Although, to be a success, it is the quality of bidders
rather than the quantity which holds importance.
If a sale is not achieved under the hammer, it is best to try to strike whilst the iron is hot and it is often possible to agree a sale privately immediately after the auction, whilst prospective bidders are still at the venue. It goes without saying that should the worst outcome occur, and a sale is not achieved under the hammer or in the room afterwards, we will market the property for sale via private treaty, aiming to sell to one of the interested parties who didn’t proceed at auction.
The decision to sell property or land is never one taken likely. The decision over the agent entrusted with what is likely to be your family’s largest asset, is even bigger. With a keen eye for opportunity, our team of Rural Chartered Surveyors and Surveyors are experienced at suggesting prime properties for auction.
Auctions by Howkins & Harrison
Our auction dates will be advertised via our email newsletters and on our website. If you would like to sign up to our e-newsletters, click the link or email: firstname.lastname@example.org