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Selling property at auction

publication date: Mar 31, 2006
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Clive Emson Auctioneers were founded in 1989 to supply a high profile auctioneering facility to corporate and independent Estate Agents, private Clients and Statutory Bodies.

The company holds seven four-day auctions each year, with between 150- 200 Lots in each sale covering Kent, South East London, Sussex, Surrey, Hampshire, Wiltshire, Berkshire and the Isle of Wight. With a distribution of 80,000 catalogues, every sale, a Clive Emson auction is the most effective method of exposing property and land to the widest possible market.

  • So many types of property or land can successfully be sold at auction and their catalogues can include:
  • Residential Properties for Improvement and Refurbishment.
  • Commercial Properties - either vacant or tenanted.
  • Development Land - single building plots to multiple sites.
  • Conversion Projects - from barns, woodland and amenity land.
  • Garages from single lock-ups to whole compounds.
  • Freehold Ground Rents (Reversions).
  • Unusual properties, e.g. beach huts, railway bridges, public conveniences etc.

But, as an Estate Agent advising a Client to sell their property or land by auction rather than the more traditional method of Private Treaty must, surely, go against the grain! But it is often the best advice and, in certain circumstances, the only way of establishing the right price, especially where properties are unique or difficult to ‘value’, appeal to a wider audience of prospective buyers or, perhaps, there are sensitive circumstances surrounding the sale.

The main advantages of selling by Auction include:

  • Immediate Exchange of Contracts (at the fall of the gavel).
  • Swift completion (usually 28 days).
  • Best price achieved (ideal for Executors, Beneficiaries, Receivers, Trustees, Mortgagees, Authorities etc.)
  • Widest possible exposure to the market.
  • Entire catalogue is included within the Estates Gazette.
  • Sale is not subject to finance or, even, survey.
  • A completely transparent transaction if sold in the Auction Room.
  • Estate Agents acting as Joint Auctioneers receive a share of the commission earned.
  • Selling by Auction can save Estate Agents from potential damages claims!
You may dismiss the last “main advantage of selling by auction” point, BUT, do so at your peril!

There are many, many occasions where an Estate Agent has sold a property to a developer/dealer or speculator only for the same property to appear in our catalogue a few weeks later, subsequently selling at auction for thousands of pounds more!! You, the Estate Agent, may then be at risk for a damages claim! Does your P.I cover you against this?

The facts of Moor Court, in Crowborough, East Sussex catalogued as Lot 17 in our February 2006 auction sale gave another opportunity to compare traditional marketing methods with auction. In need of substantial refurbishment and improvement, the property had been vacant for a number of years and, following our inspection, we recommended it should be offered by auction with a pre-auction guide price of £425 - 450,000.

There were two Executors for the Estate, one vehemently opposed to auction, the other fed up with the delays of three years and wanting to bring the matter to a close.

Initially, two well respected Agents were instructed to offer the house by private treaty and, as predicted, the response was so great they went to “best and final” offers.

The perceived “preferable buyer” was chosen and, again as we predicted, after a lengthy period while the lawyers worked on the contracts, they reduced their offer by a significant amount following a “local valuation”.

The Agents then advised that the best way forward was to contact the “under bidders” and began discussing offers of between £450,000 and £525,000 all, of course, subject to contract and some on the basis of renegotiating the deletion of the development clawback clause. More time and expense while the lawyers pushed papers backwards and forwards!

Eventually, after one of the reluctant Executors was given various undertakings regarding the minimum price and division of the proceeds between the beneficiaries, the auction was sanctioned by both Executors - despite the robust “professional” advice by the Executors’ various advisors that the auction would produce only a low price, would be seen as a fire sale and stagnate the property for months if it failed to sell!

Within five days of launching the catalogue we recorded an offer in excess of those previously being recommended by the Agents for consideration. We conducted countless viewings, sent out 115 legal packs and eventually sold the house under the hammer for £575,000 (and to include the development clawback clause!).

Not only was the contract exchanged within three weeks of receiving the joint instruction from the Executors, but the price was established and all interested parties had an opportunity to compete in an open forum. Furthermore, the Executors contribution towards marketing expenses were a fraction of the private treaty costs - less, in fact, than the Agents bill for the “special” boards at the property! And the Lot enjoyed a one and half page advertisement in “The Estates Gazette”.

Time and again auction is considered the best marketing strategy for the right type of property, but only rarely are we able to produce such a direct comparison between traditional and auction routes.

Do bear in mind, however, that auction does not work for all types of property. Indeed, in over 50% of cases we recommend private treaty as the best way forward. Not, some would say, “good for business”, but in certain circumstances undoubtedly the best advice.

A sale by auction is a totally transparent and tailor-made for sales where the Sellers need to sell at the best possible price - We are not Estate Agents, Mortgage Advisers, Planning Consultants or Letting Agents - we should work together for the benefit of the Client.

The Moor Court example is not the first time we have saved an Agent from a potential claim for not giving best advice - and it will not be the last - but if you don’t want to be put in the crossfire, don’t do it. If you do it could cost you more than you think!

For confidential advice about selling your Clients or your land/property at Clive Emson auctions please do not hesitate to give us a call now on 0845 8500333.

Kent & South East London Area John Stockey, Kevin Gilbert or Ben Snelling

Sussex & Surrey James Emson or Sam Kinloch

Hampshire, Wiltshire, Berkshire & The Isle of Wight Robert Marchant or Steve Bourne