US auction sales will be the business, say Americans

The American auction house about to start repossession-only sales in the UK has denied speculation that deals will not be done on the fall of the gavel.

Greg Spiro, executive vice-president of REDC’s international division, said that the rumour was unfounded: “It has probably come about because in the States, if the winning bid is below the seller’s set reserve, the lot is sold subject to the seller’s confirmation within 15 days. However, we are not going to be doing that in the UK.”

Spiro revealed that REDC, which started in the early nineties, was mothballed for ten years after it ran out of a supply of foreclosed properties to sell.

“The business was started 20 years ago and then mothballed in 1997 when the American housing market had picked up dramatically. It did no business for ten years – we concentrated on our other division in the business, which concentrates on building land. We started again in May 2007, when the market was crashing again.

“We had a call from one of our clients saying ‘Business is bad – it’s time for you to get back in there again’. At our first auction, in southern California, we raised over $100m.

“Since then there has been a deluge of foreclosed properties. Clients just need every possible resource to get rid of them. The traditional method of dispersal is through estate agents, but you can only go so far with that.”

REDC’s first auction sale in the UK  will last five days. Spiro promised it would be a very different experience from that offered by existing UK auction houses – and he also defended REDC’s huge 10% buyer’s premium.

“Unlike traditional UK auction houses, which essentially appeal to investors, 90% of our sales are aimed at owner occupiers. Because it’s a retail market, we have to advertise widely and this is a massive expense. We also cover a whole lot of other expenses.”

Spiro also denied that REDC would be selling off UK repos at rock-bottom prices and insisted that the company would exercise its duty of care to sellers: “We spend millions on advertising and expose the properties thoroughly to the widest possible audience. I am not sure how we could expose the properties more thoroughly, and so we do secure the best possible prices.”

He forecast: “Our sales will be more fun than the usual auction sales. We will be creating an environment where people can be relaxed – after all, most are owner occupiers who have never attended an auction before.”

There will be 500 properties on offer in next week’s sale, of which around one dozen will be Northern Rock repos.

Although no existing UK auction house has yet publicly responded to REDC’s arrival, Spiro believes they have nothing to fear: “When we got back into the US market, the traditional auction businesses were not happy, but we raised the profile of auctions generally and we have seen our competitors flourish. As they say, a rising tide floats all boats.”

And how long will REDC be in the UK? A second sale is already planned and Spiro says: “We will be in the market for just as long as there are properties to sell.”