AUCTIONS
his month we look at how
T
estate agents can get involved
The certainty
result in a significant level of expenditure.
A very successful ‘half-way’ house would
in the auction business. The
popularity and press coverage
of a sale on the
be to become a joint auctioneer.
If you can see that you have a stream of
of property auctions has never
been higher than it is now.
fall of the gavel is
suitable properties coming to auction then
many estate agents have successfully joined
More and more agents and individuals are
looking to see if they can share and enjoy
also a motivating
forces with either a national London
auctioneer or a local auctioneer, agreeing
this side of the property market.
This increase in exposure is partly due to
factor for a vendor
to be a joint auctioneer. In general terms
the auction house provides the back up,
the rise in repossessions over the last two
years and the increase in the number
when choosing the
auction facilities, marketing, catalogue
production, auction expertise and a
which are finding their way through to the
auction room. With the maturing internet
auction route.’
mailing list. The estate agent as joint
auctioneer provides the property and will
it is now much easier for auction houses to be involved in the viewings. The
reach a potential buying market. Indeed, in In order to make the property attractive commission on the sale would then be split
a recent Ombudsman case an estate agent in the catalogue the guide and reserve need at a rate agreed between the two parties
was fined for not considering the use of to be set in the order of 20-30 per cent often at 50/50 once the property is sold.
auctions when advising a client on the below the last asking price. What will The benefits to an estate agent joining an
disposal of a property. generally struggle to sell at a property established auctioneer are:
There are numerous benefits of being auction is a typical modernised house
involved in auctioneering. Firstly fees will being offered by a vendor who lives there
•
a minimal exposure to costs
be generated on the sale. Secondly, and has failed to sell it through an estate
•
guarantee that the property will
auctions have always attracted a great deal agent and wants to set a reserve equal to or have wide marketing with the
of media interest and for a regional auction very close to the last asking price. The existing mailing list
you will be able to generate much in the property has to appear to be attractive to
•
a very short time from fi nding a
way of press interest for what might be a the trade buyers. suitable property to holding an
single branch agency. In addition, the buyer Having identified a suitable source of auction for that particular lot
and vendor may well be in the property stock does one set up a new auction
business, which would lead to repeat department or become a joint auctioneer? There would obviously be no need to set
business and sales, rather than a one-off To set up an auction department will up a whole new business as one could be a
purchase or sale by a private individual. involve a great deal of work but the reward joint auctioneer with just one lot in the
can be satisfying. Firstly you need to make catalogue. In addition by handling the
FIRST STEPS TO WIELDING THE GAVEL sure that you will have a supply of suitable viewings you will get to meet many local
There are two key ways one can get stock to offer and that you have a route to developers who may not be known to you,
involved in auctioneering. Firstly you can market and a mailing list to whom you can but given the nature of their business they
set up a new auction department with send your catalogue. It would not be may well instruct you, if they are the
everything that entails, or become a joint enough just to take out a series of adverts successful purchaser of the property to
auctioneer and team up with an existing in the local paper and hope that local either let it or sell it on, once it has been
auction house. developers will find you, either that way or developed. In all cases your profile will be
Before looking at the two different ways, through the internet. raised in the local market place.
it’s prudent at this stage to consider what
makes a good ‘lot’ and what does not THE RIGHT AUCTIONEER TAKE THE LEAP
generally sell at auction. My observation, In addition once you have the stock and In conclusion, property auctions are seeing
after watching auctions over the last 25 the buyers you will need expertise in a continued growth both in the number of
years, is that the vast majority of vendors running the auction, there are many rules lots and in public interest and awareness of
will never have lived in the property, it is and regulations unique to the auction them. Estate agents can capitalise on these
not their principal residence and they are industry. You will need to understand the two facts by being involved in the industry.
not emotionally attached to the property. auction process and also have the services Both solutions have their merits though
Often it will be unmodernised, the vendor of an auctioneer who understands joining with an established auctioneer does
will be a bank, property company, executor property. Some new auction houses in the limit the risk and speed up the time to
or a local/municipal authority. The past have found it very difficult when market. Some estate agents have started off
timescale to achieve a sale will often be as attempting to use an experienced chattels as joint auctioneers and now have set up
important as the ultimate price achieved. auctioneer to sell property. The pace is very their own auction departments having
Having said that, it should be noted some different between the two disciplines and gained some experience as a result.
auction lots sell at prices in excess of the not many make a successful transition.
last asking price in the estate agent’s With all that in place the marketing and Contact David Sandeman if you’d like to
window. The swift timetable and certainty advertising will have to be arranged to discuss it with him: davids@eigroup.co.uk
of sale on the fall of the gavel is also a attract a large crowd in to the room to get a
motivating factor for a vendor when bidding atmosphere underway. All of this
Have you ventured into auctions? Tell us:
choosing the auction route. can take up a great deal of time and also
www.propertydrum.com/articles/auctionjv
PROPERTYdrum JULY-AUGUST 2009 67
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