Why auctions are an excellent way to sell tenanted properties

by Martin Cunningham

18:27 PM, 17th June 2013
About 7 years ago

Why auctions are an excellent way to sell tenanted properties

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Why auctions are an excellent way to sell tenanted properties

Why auctions are an excellent way to sell tenanted propertiesAuctions are an excellent way to sell tenanted property because auction rooms attract investors.

A key benefit from the sellers perspective is there is no requirement to decant tenants, thus ensuring rental revenue right up to the point of sale and removing costly void periods.

Keeping tenants in situ also has the added benefit that properties tend to view better when lived in, provided of course the tenant is reasonably tidy.

From a buy-to-let investor point of view Auction House find landlords welcome the fact that they are getting rent from day one and have no need to set about paying rental agency fees to locate tenants, so it’s a win win for selling / buying in the auction room.

Perhaps of paramount importance is that our auction rooms attract multiple investment buyers as we invest heavily in marketing and promotion.

Auction House operates via 30 regional auction rooms.

If you are serious about selling tenanted property, or indeed selling vacant properties at auction, the next step would be for me to arrange for your local auctioneer to meet with you, discuss the properties and agree terms. This conversation and auction appraisal of the property(ies) is without charge or obligation.

Should you want to make contact please complete the form below.

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Comments

Howard Reuben CeMap CeRER

12:25 PM, 27th June 2013
About 7 years ago

Excellent article, and very interesting subsequent points and questions.

May I add that I also get asked many questions about buying at auction because my Firm is a provider of auction finance via short term lending, capital release from existing property(ies) and pre-approval mortgage deals (subject to valuation only).

With the right 'combined' advice made available from auction houses, legal advisers and finance providers, auctions are indeed an excellent source of new properties for buyers.

And, as is mentioned above, an excellent outlet for sellers too as is also the case for some of our Clients who 'trade' property.

One such example recently is a Client who we arranged short term finance for a purchase of a property which was secured at a very keen price, and which was then sold very quickly afterwards via an auction house for the 'real value'. An excellent 'recycle' of funds which made a handsome profit.

All in all, auctions can certainly be a very positive experience, in my opinion.

Howard

Martin Cunningham

12:56 PM, 27th June 2013
About 7 years ago

@Mark Alexander, ref Deed of Assurance, Auction House UK holds its annual conference next week and the use of the deed of assurance will be a topic to share with the 85 delegates representing all 30 Auction House UK auction rooms 🙂

Martin Cunningham

13:00 PM, 27th June 2013
About 7 years ago

@Howard Reuben pleased you have found the thread useful and thank you for your comments.

Mark Alexander

13:05 PM, 27th June 2013
About 7 years ago

@Howard - I've heard that some investors do very well out of buying provincial properties from London auctions and then flipping them straight into a sale with their local Auction House. Is this what you meant?

If so, any chance you could share an example with figures here (no names of course)? That might well be a model which a lot of investors have not considered.

As a matter of interest, what are the best terms around for say 50% of purchase price bridging finance these days?

Howard Reuben CeMap CeRER

13:36 PM, 27th June 2013
About 7 years ago

@Mark, the terms we arranged for this particular Client (who wanted a 65%LTP) arrangement to buy was as follows;

purchase price £102,000
short term net loan advance £66,050
(deposit £35,950)

gross loan (inc added fees) £67,987 (included legal, arrangement and TT fees)
no early redemption charge
monthly interest payment 0.73%

I am advised he sold (via an auction) for £135k within the month

So, £135k - £101k - £2162 (fees and val cost) = £31,838 gross profit (ie tax and other professional fees were payable) = so all of his money back and still a nice profit too, in just one month.

Obviously here the fundamental driver was that he was able to buy very keenly, but we have many more examples, especially in Scotland, where our investor Clients are making huge returns doing just this.

Howard

Martin Cunningham

13:40 PM, 27th June 2013
About 7 years ago

@Mark Alexander at Auction House UK we constantly monitor all UK auction room activity, performance and results, including picking up examples of flipping....this is but one example:

A one bedroom leasehold flat was sold by a London auction room for £29,000 (15.2% yield). The purchaser then entered the property into Auction House UK Leeds auction; guided at £25,000-£30,000. The property resold at auction for £36,000 (12.2% yield) giving the vendor a £7,000 profit after 3 months of ownership.

Martin Cunningham

13:45 PM, 27th June 2013
About 7 years ago

@Howard Reuben note comments about Scotland, delighted to advise that Auction House UK publicly announced this week our expansion into Scotland with Ross Harper Auction joining Auction House UK

Mark Alexander

13:47 PM, 27th June 2013
About 7 years ago

@Howard and Martin - nice deals, I prefer Howard's example but both are a lot better than having a proper job and working for a living!

What are we doing chatting on a forum? LOL

Sian Hemming-Metcalfe, MARLA (INV)

17:18 PM, 5th July 2013
About 7 years ago

I would like to ask what I hope is a very simple question; as someone who has never bought or sold at a property auction before (but now very interested!) how do you determine the price / value of the property with tenants in situ?

Is this set at the current " property market value" and should you set your expectations at a lower price; say 10 or 20 % lower than market value or is it all about the yield?

Mark Alexander

22:38 PM, 5th July 2013
About 7 years ago

Reply to the comment left by "Sian" at "05/07/2013 - 17:18":

Hi Sian

I think Martin must be away as i have been trying to contact him today too and his mobile is going to voice mail. I'm sure he will be along soon. Good question 🙂

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