BRM Host “The Changing Face of Property Auctions” Seminar – Key Takeaways
Last week our Real Estate team hosted a Breakfast Seminar at The Crucible in Sheffield which saw attendees from within the property sector from across the South Yorkshire and Derbyshire region attend.
As well as a chance to network with peers, attendees listened to guest speaker Adrian Little, Director of one of the largest online property auction houses in South Yorkshire, Mark Jenkinson (part of the Eddisons Group).
Adrian shared key insights and expertise around ‘The Changing Face of Property Auctions’ – we’ve outlined the key takeaways from Adrian’s presentation below.
The impact of Covid-19 on the auction industry
Before Covid-19 property auctions were traditionally carried out face to face. It was an environment where agents, solicitors and others were able to be in one place and do business. It was a valuable way to gain a sense of the market for all involved.
However, since March 2020, Mark Jenkinson fully adjusted to hosting auctions online and take the view that virtual auctioning is here to stay. It is reliable, provides buyers and sellers with a trusted platform and allows for a straight-forward and informed experience.
Adrian shared that holding auctions online opens the market up with people from across the country able to bid and purchase property – something that may not have happened in a face-to-face auction.
The pros of online auction
The competitive nature of the property auction is still very much present online, and buyers are given a more accurate and up to date level of interest than they may get in person.
Buyers are also if they wish able to view their chosen property immediately before the auction begins as well as access the legal pack at the same time.
Online property auctions offer a safety net against collapsing sales, for both buyers and sellers.
When you sell a property at auction, you can be certain contracts are legally exchanged when the bidding ends. You won’t have to undergo any further negotiations or worry about buyers withdrawing from the sale before completion.
Hot topics and market trends
Guide prices
Adrian defines a guide price as ‘The initial anticipated level of the reserve’.
Traditionally, unscrupulous auctioneers could put artificially low guide prices on lots to create a low reserve. However, with online more in the public spotlight advertising standards apply greater scrutiny to this practice of ‘bating’ to get a sale.
There is now a 10 per cent ruling by advertising standards on guide prices. It is a huge area for discussion as guide prices are still being abused to draw people in at lower guide prices.
Hidden fees
30 per cent of people who brought properties at auction didn’t review the legal pack last year. A good legal pack is essential for buyers purchasing through auction and it is accepted practice that the buyer is asked to contribute to the cost of the packs in particular searches as the seller is covering time and costs the buyer would ordinarily be responsible for in an open market sale.
Buyers need to be aware of hidden fees including premiums based on the sale price which may be in the small print of the auction conditions and aren’t clear at purchase. This can cause a nasty and expensive shock at completion for the unwary.
Adrian’s advice is to always look out for additional costs in the auction pack so to avoid being caught out over budget or out of pocket.
Late changes
Sometimes issues arise and legal packs have to be updated. The auction route should be open and transparent, but Adrian advises to be careful of late changes to your asset’s circumstances and special conditions which may come into play.
Key tips and staying up-to-date
Adrian advises to look out for RICS’ forthcoming updated property auction guide as well as the fifth edition of the ‘Common Auction Conditions’ which is due to be rolled out soon.
Adrian also recommends prospective buyers at auction subscribing to EI Group’s publications which offers up to date insight and great intel around comparable data within specific locations.
Sign up to our next Commercial Real Estate Breakfast Seminar
Our next event is set to take place on Thursday 6 June 2024 which will see BRM’s specialists in Real Estate and Property Disputes discuss legal issues surrounding sales and purchases at auction.
To register your interest, contact events@brmlaw.co.uk
