Property auctions have changed dramatically over the last 30 years, evolving from small-scale events focused on lower value property, to day-long sales featuring a wide cross-section of the market. And the sector continues to grow. Savills Auctions has sold over £300m worth of property in 2016.
Over the past three decades the reasons for selling at auction have remained consistent, ranging from needing a quick sale to owning a unique property for which it’s difficult to establish a value.
Once the hammer comes down, the sale is agreed and a buyer pays a non-refundable 10 per cent deposit there and then, with completion taking place within 20 days. This transparent process has made the auction room popular with councils, charities, probate sales and mortgage lenders.
However the traditional profile of who the buyers and sellers are is changing. The auction room is no longer just a domain for the property professionals, and a new demographic is emerging. Owner occupiers would rarely buy or sell via auction 15 years ago and, while they’re still a minority, this demographic has grown by around 30 per cent during that time.
A large number of builders and developers attend auctions looking for property that is in need of modernisation and refurbishment. If your property falls into this category, you might well achieve a higher price at auction than you would if you were to sell it via private treaty.
We had a recent sale in south west London where the auction seller had purchased a property via an online agent just a few weeks beforehand. The original sellers had needed a quick sale and the property needed renovation, a perfect instruction for the auction room.
That is exactly what the auction seller did and achieved around £100,000 more at auction than they initially paid. It’s a shame the original seller didn’t consider the auction room because they ended up losing a significant sum of money.
Most types of property are suitable for auction, depending on a realistic reserve price being agreed, which also protects a property from ‘under-selling’. If a property does sell, fees are in line with what a traditional estate agent would charge, or you revert to a nominal catalogue entry fee if the property is still available at the end of the auction.
The integration of technology into the auction room will be crucial to making auctions easier to engage with, further increasing the reach and diversity of sales and the auction room. This will be particularly important in attracting owner occupiers.
It’s going to be a slow process of education, but we are on the right track now. And with growing marketing opportunities offered through greater technology, there is no reason why owner occupiers will not become greater participants in the auction room over the next decade.