Would you sell in an auction if you were me?

by Readers Question

15:10 PM, 5th September 2012
About 9 years ago

Would you sell in an auction if you were me?

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Would you sell in an auction if you were me?

Readers Question - Sell in an auction?Steve wants to know from readers of Property118 whether they think, in his circumstances, he should sell his property in an auction.

Steve has very kindly given us permission to publish his email below.

“I have recently inherited a 3 bed semi from my father. The property is in need of modernisation and is in a fairly deprived former mining village in Derbyshire. As my father payed no interest in the property he has never increased the rent and the same tenants have lived there for over 10 years at the same rent (£260 per month!). I have placed the property under the management of a professional lettings agent and they have increase the rent to £320 per month but say they can’t increase it any more for a while.

My question is this. As I see no room for capital growth in this area in the foreseable future and the rent is so low I would like to sell it and wondered if you have any thoughts on the best way to do this.

If I sell at auction would it be better to use a local company ie Graham Penny or is it better to sell at a large auction house in London.

Would it be better to hang on to it for a few years and try to increase the rent to a more realistic level (I am told that the true rent should be around £385 as it stands and around £425 when renovated) in the expectation of realising a better price.

Thank you for your time.

Best regards

Steve Cook”

What would your advice to Steve be?

Comments

Mark Alexander

14:58 PM, 7th September 2012
About 9 years ago

Hi Steve

I don't know Rayhan but it would appear from his posts that he does have experience of buying and selling tenanted properties at auction. I have only ever purchased and sold properties with vacant possession at auction, therefore, I can only share experience of that.

Have you thought about looking at a few auction results, both local and London based and compared them?

I think that's what I would be doing if I were you as it adds some science to the opinions that have already been shared.

Good luck whichever option you go with and please let us know how you get on.

Anthony Endsor

23:19 PM, 11th September 2012
About 9 years ago

Hi Steve
If I was in your position I would sell the property at a local auction.
For £320 pcm it seems pointless to hold on to it with no hope of the value increasing much, and it certainly doesn't seem like it would be worth bothering doing all the work. Money down the drain for a property which if you sold it privately would at best fetch £70k once done up, but would most likely take several months at least to sell, if it sells at all. Then there's the agents fee to consider, which will probably be more than the auction fees. If the area itself is undesirable, a new kitchen, bathroom, garden makeover etc, won't change that.
I've seen quite a lot of properties go for auction in my area in Manchester and they tend to go for well above the guide price. People get excited at auctions and lose sight of how much they are actually paying as the auctioneer increases the price, they can't bear the thought of losing the property so they go with the extra £2k, £5k, £10k, etc, until finally someone gives in and only one bidder is 'standing'.
So that woudl be my route. Who knows? You could well be surprised at the outcome.

8:14 AM, 12th September 2012
About 9 years ago

Hi Anthony
Thanks very much for your comments.
Your views make perfect sence and concur exactly with mine. I think you have just made my mind up. Graham Penny here I come.
Thanks again.

16:34 PM, 13th September 2012
About 9 years ago

LHA rate. Look up the LHA rate form the local council and if more than what the agent says the open market rent is charge the LHA rate. One word of warning if this property becomes vacant depending on the area it will be vandalised. So sell it with tenant in place at highest rent going.

3:24 AM, 14th September 2012
About 9 years ago

Wholeheartedly agree... there is no substitute for the understanding you will gain by doing your own research (i.e. seeing the results in auctions first hand). Time permitting...

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