You will no doubt have heard the line that the best way to get an empty property back into use is to change its ownership. After all who would buy a house in order to leave it empty? These pages are frequently filled with ingenious ideas thought up by local authorities to persuade or even force owners of empty properties to sell. Many of these ideas are very effective. But what we sometimes forget is that there is an industry out there that does this job already. It helps hundreds of owners every week to market their property; it finds buyers, puts the two together and manages the transaction. I am of course talking about the property auction business.
Over 25,000 properties are sold in more than 1000 property auctions every year in the UK. Auctions are a quick and decisive way of selling; once the hammer has fallen a binding contract of sale is established. It can be much quicker than having the property hanging about for months with an estate agent. One of the great advantages is that auctions have a targeted audience made up of developers, cash buyers, investors and portfolio landlords who may well have different requirements to prospective homeowners buying at an estate agent. The very issues that make empty properties unattractive to homeowners may be appealing to these buyers.
Look through any property auction catalogue and you will see many of the lots (properties) are indeed vacant. An estimated 10,000 empty properties are sold this way every year. With this track record and their client group it makes sense to see how you can make best use of property auctions. Type a few words into Google and you will see that there are plenty of guides for both buyers and sellers on auctions. This is not supposed to replace them but may give a few details to help you advise your clients and make property auctions work for you.
There are many property auctioneers some of them are household names like Halifax, Savills and Allsop who operate nationally and run auctions featuring properties across the whole country. Other auctioneers are small local operations and will feature properties from a region or even just one town.
Auctioneers publish a catalogue a few weeks before the auction. This gives details of all the properties that it expects to be available. In practice some properties are removed and occasionally some properties are added before the auction itself.
Those interested in bidding can visit the properties in advance and carry out a survey
Auctions are held at centrally located venues often hotels. Anybody is free to attend
Choosing the right auctioneer is important. Clearly trying to sell an old wreck in an auction specialising in prestige mansions isn’t the best idea. Different auction houses attract different client groups and picking the one most likely to be interested in your property is a good way of choosing. Other factors you should consider are the size of the potential attendance at the auction; the more people that attend the more likely that a property is going to sell.
Look for the success rates of different auction houses. They vary between 60 and 90 percent. And lastly look for the fees, these vary too, but don’t forget that a good auction house that achieves good sales price will be better value for the client even if its fees are higher.
What does it cost?
The seller is normally charged a fee by the auctioneer this covers a proportion of the cost of marketing the property and running the auction. This fee has to be paid even if the property is not sold. In addition if the property is sold the seller pays a commission to the auctioneer in much the same way an estate agent does. Charges are similar to estate agents fees an average perhaps being 2.5%. In addition most auctioneers charge a small buyers fee that is paid by the buyer if they are the successful bidder.
When the hammer falls at an auction, it establishes agreement of a binding contract between buyer and seller. The buyer must pay 10 percent of the total sale price of the property before leaving the auction house. And will normally have to pay off the remainder within 28 days.