A lot less: Houses at auction achieve 40% less than v...

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04 September 2020

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A lot less: Houses at auction achieve 40% less than via private treaty

With estate agents increasingly offering auction options to vendors, new research makes interesting reading - and suggests that homes sold via auction achieve 40 per cent less than those sold via private treaty.

Combining data on houses bought at auction in 2020 and official government house price data, the research shows that on average houses sold at auction cost £138,240.

Those sold through other methods achieve an average £231,885.

The research appears not to have taken into account property condition or other factors which may account for why some have been sold through auctions. Nor does it separate traditional ‘ballroom’ property auctions from the Modern Method of Auction now being offered by a growing number of High Street estate agencies.

Overall, properties auctioned in the north east appeared to have the largest disparity with those sold through private treaty. On average, houses bought at auction in the County Durham, Tyne and Wear, Cleveland and Northampton in 2020 have been 76 per cent cheaper.

Elsewhere, houses bought at auction in Lincolnshire this year cost 73 per cent below the average property price for the area, with Scotland 72 per cent down.

In London the difference was 60 per cent; however, in the wider south east of England the gap was only 27 per cent.

The research was conducted by auction finance specialist Octagon Capital.

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- Simon Shinerock
- 04 September 2020 07:45 AM
Auctions, by their nature struggle to become mainstream. Their key benefits are certainty and speed, however both are at risk with the march of technology and innovation. Reservation agreements now offer more certainty without the wait for the auction to go live and micro auctions can come from more agile practises like virtual open houses. There is no doubt that the concept of competitive tension is a powerful one but unless the vendor needs an all or nothing sale they are better served by a more agile approach

- charlotte Jeffrey- campbell
- 04 September 2020 08:17 AM
Confusing stats - does this mean buyers who sell their property at auction get x% less than if they sold the same property or is it just an overall analysis that properties that sell at auction are generally cheaper stock - which would be true. Needs better clarification.

- Richard Copus
- 04 September 2020 09:37 AM
These are bland statistics and, as they say, they don't take into account the property condition or other factors which make them dubious from the start. Two of the rules for advising clients to sell at auction are: your house is in a poor structural state and unmortgageable; you want a quick, secure sale and are prepared to accept less than market value to achieve this. These properties obviously sell at less that they would if the same property was in good order or the seller was not in a hurry, so these figures are to be expected. The Modern Method throws a can into the statistics because conventional houses are often sold this way, but by and large, the amounts achieved by this method on conventional houses are closer to the amount which they would have achieved if they had been sold by private treaty, with the high reservation fees depressing sale price in some cases. Who are Octagon Capital?

- Matthew Payne
- 04 September 2020 11:39 AM
These stats dont feel any different to what they have always been. I remember the big yellow pageesq catalogues being delivered 20 years ago. All distressed sales or repos at signifcantly lower prices.