Under the hammer with Parsons Son & Basley Auctions
Auction sales are up from last year, with final sales exceeding the guide prices. Parsons Son & Basley looks at the trend
Sales of property by auction is traditionally seen as the marketplace for disposal of probate properties as a result of inheritance, problem properties with absentee landlords or short leases, properties that are deemed unmortgageable for whatever reason or properties where nobody really knows the market value.
However, due to changing market conditions, this trend is now reaching the receivership market where properties are requiring disposal as a result of bankruptcy or receivership. Banks or lending institutions are required to try to regain any loans outstanding on property that has been repossessed due the current economic climate.
Auction sales are the most effective method of obtaining the best possible price in an open market competition and many of these institutions favour this method of sale. There can be no doubt that the auctions are transparent, encourage competitive bidding and give potential purchasers the opportunity of viewing legal documentation prior to making offers. The auction contract is binding and vendors can expect to receive their monies 28 days after the auction date.
To avoid instances of misrepresentation the RICS Common Auction Conditions (third edition), which is recognised as the blueprint for the process, advises vendors to guide the price of the property at a level which reflects the reserve price (the lowest price they are willing to accept). The market is very price sensitive at present and if this level is not considered to be competitively pitched there will be no competition for it. The auction process works perfectly when two or more buyers bid against each other and drive the property over the guide and continue to slug it out in time honoured fashion until victory is claimed and highest price is achieved.
An example of this was a vacant four-storey terraced residential property sold in September last year in Broad Street, Brighton that was marketed at a guide price of £350-375,000. The building had been squatted for 18 months previously and was in need of considerable refurbishment but was sold prior to the auction at £440,000 – over 25 per cent in excess of the guide price!
A number of properties have been sold at impressive levels at recent auctions that were marketed by agents previously by private treaty and the auction process has reached well in excess of these. In Warwick Street, Worthing, a mixed use investment with vacant retail unit sold for 320,000 from a guide price of £275-300,000. A freehold plot of land off Preston Drove in Brighton with offices and stores but with development potential sold in February for £127,000 from a guide price of £80-90,000.
According to the Essential Information Group (the auction statistics database) there was an eight per cent increase in properties sold this February from last year and an overall gain of 11 per cent from 2011 to 2012. This year looks like improving on these figures with lots offered up 16 per cent, lots sold up 23 per cent, and with an average sale rate of 79 per cent from each auction, there is a demand for keenly priced lots from cash-ready buyers.
Parsons Son & Basley, 32 Queens Road, Brighton BN1 3YE, www.psandb.co.uk
Date of next auction is 17th April 2013 at Hove Town Hall, Norton Road, Hove, commencing at 3pm. The catalogue is available online now.
