WHY IS DEMAND GROWING FOR AUCTION HOUSES? COLIN SANDERS - MORTGAGE INTRODUCER
23.03.23
WHY IS DEMAND GROWING FOR AUCTION HOUSES?
Demand seems to be booming for auction sales.
By Colin Sanders, Chief Executive Officer, Tuscan Capital Limited.
It is potentially a good time to buy at auction, although as always, sales prices are ultimately driven by supply and demand. I expect to see many buy-to-let properties coming on to the market in 2023 because unsophisticated/inexperienced landlords can’t make the numbers work. If this turns out to be the case and there is a plentiful supply of such properties then I expect the more well-heeled buy-to-let landlord to be in for some bargains.
I could see property auctions growing in popularity over the course of 2023 because vendors might prefer to sell via an auction as it can provide certainty of closure in a short time frame. In addition, a good auction house will provide a brochure prior to the auction which will be circulated far and wide and reach all of the property investors and buy-to-let landlords looking to grow their portfolios in the region.
I’m sure auction houses are actively marketing their services and landlords are aware of this option.
The benefits of buying a house at auction are numerous. A good auction house works with a proven step-by-step process that provides its clients with access to commercial buyers and an excellent way to manage the sales strategy.
The auction house will circulate a brochure with all of the lots available at the auction, providing photos and particulars. This provides the opportunity for interested parties/potential buyers to view the properties and inspect the data room for the individual lots prior to auction.
Meanwhile, the auction house will be marketing to all members of its database which will include all property investors and buy-to-let landlords in the region.
A reserve price will be agreed with the vendor but a lower opening bid price will attract initial interest. As a vendor, you will know how many potential bidders have downloaded the data before the auction starts; if no interest has been shown then it may be worth reconsidering the sales strategy or price set.
An auction can be the best way to achieve some competitive tension, often resulting in a higher price (if not oversupplied). The auction process requires successful bidders to pay a significant non-refundable deposit, thereby providing the vendor some assurance. The auction house will also require any potential bidders to register and confirm their credibility and funding
Finally, completion is normally contractually agreed after 28 days, providing certainty and speed for the vendor.
Why is demand growing for auction houses? Read the full article on Mortgage Introducer now.
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