Agents and sellers are being warned against putting unsuitable properties up for auction.
Stuart Collar- Brown, chief executive of online auctioneer platform My Auction and the Assured Sales service, warns putting the wrong type of homes under the hammer risks leaving vendors with large losses.
He said uncertainty in the market about interest rates, house prices and mortgage pricing is confusing clients, adding: “They have properties which are not worth anywhere near the asking price they are trying to achieve on the open market. They are desperate to sell but can’t afford to sell at the price their property has dropped to.”
Collar-Brown said many vendors are now turning to auction houses such My Auction with many taking homes on which in a normal market would never be seen in an auction.
He said these are very often multi-million-pound properties.
Collar-Brown said the idea and messaging towards the vendors is to put a high reserve on the property and it will then garner enough interest at auction to make close to the open market value.
However, he warned, when these unsuitable auction properties are being marketed by the auction house, the process is pushing down the price of the property further and lowering its capital value.
He added: “This is putting a vendor, who can no longer afford to pay for their property in an even more perilous position.
“If you can hold onto your property or offset the loss elsewhere, it is not worth putting these types of properties into an auction as you will end up making a big loss because if you don’t sell a property in an auction, it can leave it with the stigma of being unsold which creates problems when trying to sell it in the future.”
Collar-Brown said there is no quick fix in a market like this and said sellers may have to take a drop on their property if you really need to sell and hope to get the same further up the chain.
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At last an online only auctioneer talking fairly and sensibly. Panic selling at auction is never advisable and placing high reserves on properties just results in properties often not selling and the owner having to go through the whole remarketing process in a falling market. I don't agree with the stigma about not having sold at auction. That was the case years ago, but people's attitudes have changed with increased knowledge and information. Also, if you have a multi-million pound property or a street liner and are about to be repossessed or have a couple of months leeway before forced into a new mortgage at 6% from 1.5%, then putting your house up for auction at slightly less than market value should result in a quick and secure sale and save a lot of future worry and costs. With auction now a mainstream method of sale no property is unsuitable to auction, but the reason for auctioning the property may make it an unsuitable way to sell it.
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