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Cash is king as lots still sell

publication date: Sep 2, 2008
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The so called “credit crunch” is now beginning to bite as banks are making borrowing a little more difficult but, as usual, in such times, the phrase “cash is king” springs to mind. We can all point the finger to blame someone for the hardening of the property market. The US sub-prime mortgages; UK lending authorities perhaps for over-lending; increased oil and food prices; or the doom and gloom scare-mongering reported by much of the media. What we should be focusing on is the positive.

Let’s not forget that it wasn’t that long ago that most land and property auctions were achieving between 50-60% success rates, but in the last few years the percentage sold has increased to figures well over 75-80%. However, since the beginning of 2008 figures have dropped, but, and it is a very big but, auctioneers are still selling lots of Lots!

A sprat to catch a mackerel

Guide prices and, ultimately, the reserves are of paramount importance. Has the well-known phrase “a sprat to catch a mackerel” ever been a more poignant saying? If guide prices are kept keen and at figures perceived by prospective buyers as good value for money, then the Lot will attract interest.

Certainly, in theory, the more interest that there is in any particular lot, the more bids there will be in the auction room and ultimately the higher the eventual price could be. Remember those entering Lots are not being catalogued to test the market place, but the Lots are there to, hopefully, be sold. Clive Emson

Auctioneers endorse this view commenting that, with even more realistic guide prices and reserves, this should tempt even the more pessimistic of buyers to take any catalogue seriously.

“As always, with our auctions” says Clive Emson, “there are many Lots on the market for the first time and some that are recession proof, being unique or rare. If they are not bought when catalogued and offered in the auction, there may be not another chance for several years to come. Those in the know are only too well aware of this and some of the Lots sold this year by Clive Emson Auctioneers have been sold with immense success.”

In Emson’s July auction, a block of eight garages in Sandgate, Nr Hythe, Kent was offered with a pre-auction guide price of £125-135,000. The site has planning permission for the redevelopment of the site and construction of eight replacement garages with two residential units above. Despite some pessimistic comments that the Lot would not sell, the hammer finally fell at £171,000, some £36,000 above the top end of the guide.

SOLD! - at 6 times guide price!

In the same auction, an eight acre triangular shaped site fronting Birling Road in West Malling was offered on behalf of a local authority with a pre-auction guide price of £30- 35,000. After fierce competition the Lot finally sold for £80,000 and a substantial unbroken parade of freehold commercial and residential ground rents secured on 13 retail units together with the two-storey upper parts comprising 10 maisonettes and other accommodation, currently let at £590 per annum, sold on behalf of another local authority for £148,000 against a pre-auction guide price of £15-25,000.

This clearly demonstrates that because bidding is in an upwards direction, the final selling price can exceed the guide price. In the case of the Twydall, Gillingham Lot, by some considerable way, almost six times the upper guide!

In the May/June 2008 auction, 90 acres of agricultural land with two agricultural barns in Westfield, Nr Hastings, came to the market with a pre-auction guide of £220-260,000. The land, subject to an existing agricultural tenancy agreement at a current rental of £7,000 per annum, sold in the auction room for £430,000. In the same auction, an excellent development site for 14 flats on the corner of Paddockhall Road and Milton Road in Haywards Heath, West Sussex, was catalogued with a pre-auction guide price of £900-950,000. The Lot sold on behalf of a national company for £960,000.

In the Clive Emson Auction in June, a pair of former cottages with potential requiring total refurbishment was offered on instructions from the executors. The cottages, which are situated on the outskirts of the village of Barham, Nr Canterbury, were catalogued with a pre-auction guide of £280- 300,000. One cottage was a threebedroom while the second cottage only had one bedroom. The hammer fell at a very healthy £400,000.

In the same auction, The Old Scholars Hut at Birchington, Kent which was offered on instructions from trustees, being a detached brick and rendered single storey building with a timber lean-to at the rear, was offered with a pre-auction guide price of £50-55,000. It sold at £74,000.

The warehouse in Abbey Place, Faversham is a commercial investment situated on the northern fringes of the busy market town centre with accommodation arranged over two floors and divided to provide nine letting units of various sizes. Six are let at just over £12,000 per annum plus three vacant units and was offered on behalf of the executors. It sold for £166,000 against its pre-auction guide of £135-145,000.

A sale of convenience

The company’s catalogues often contain unusual Lots and in the April 2008 auction, a town centre subterranean former public toilets came to the market on behalf of a local authority. The unusual freehold premises comprises a subterranean former public convenience situated in the heart of the busy town centre with the main building measuring 50’ x 10’. It was offered with a preauction guide price of £20-25,000 and sold to a flood of bids at £60,000.

In the same auction and catalogued as Lot 107, 35 St Margaret’s Street in Canterbury a vacant former restaurant premises in a prime city location was offered. The three-storey mid-terrace Grade II Listed property, formerly the Illvaticano Italian Restaurant and Bar, needs total refurbishment and was guided at £340-360,000. The decision to sell only in the auction room was well founded for the Vendor as the property sold for £500,000 over £150,000 more than its reserve.

Lot 146 in April 2008 - a mid-terrace house for improvement situated in Ormonde Avenue, Epsom in Surrey. The more modern house which, although in need of refurbishment and ideal for owner occupation or for letting had a pre-auction guide price of £190- 200,000 but, again, sold in excess of the top end guide, selling at £209,000. In Romsey the remaining common parts and riverbank on the Frobisher Industrial Estate sold at £18,000 against a pre-auction guide of £10-20,000.

Credit crunch or cash bonanza?

So far this year, Clive Emson Auctioneers have sold around £60 million worth of property, which begs the question, is it credit crunch or cash bonanza?

Yes, prices have dipped and buyers are cautious, because, like everyone else, they read the papers and listen to the news, but if land or property is marketed with a realistic guide price and ultimately reserve, there are still willing buyers eager to raise their hands in auction and that is exactly what has happened in our auction sales this year.

There is no doubt that when the market hardens, anyone looking to sell by public auction is looking for exposure. Clive Emson Auctioneers provide that exposure by producing 80,000 auction catalogues for each auction campaign, including the full catalogue being reproduced (in its entirety) in Estates Gazette as well as providing local, national, regional and international advertising, an extensive catalogue, mailing list and the assistance of over 460 estate agents offices who hold the auction catalogue for local distribution.

If “cash is king” it is publicity that wears the crown!