Future Property Auctions sees growth in troubled times
In association with Future Property Auctions: property auctions are a growth area, and can be used for almost any type of sale
When Future Property Auctions entered the Scottish housing market in 2009 the market was in the long slide of the housing crash. Scotland had, until that point, no real credible auction choice, unlike its neighbours in England. The continuous growth in the market since 2012 has been coupled with Future Auctions’ own growth into market leader and dominant auction force in Scotland. The company mantra was to change the perception in Scotland of what auctions are for – they are not the last throw of the dice; they are not only for the worst properties in your portfolio; and they are not only for bank repossessions.
Currently we are seeing a growth in sales of residential property, cascading in timescale/price down from the most salubrious areas to the least. The lowest-priced residential areas of Scotland still see interest from landlords basing their purchase purely on rental yields.
Commercial property sales remain flat by our indicators, though not for certain parts of the market. Small units, 500 sq ft and below, are still popular and achieve high levels of interest; large industrial units are more difficult, for example. The same applies to land – small plots without planning at the low end of the price range are popular; large scale plots, often with outline planning, are proving more challenging.
Benefits both ways
Our auction stock is generally split into 65% residential, 25% commercial and 10% land; there do not appear to be any seasonal trends. Some of our most successful auctions of the last eight years have been in December. Of the 350-400 lots that are marketed every six weeks, only 10% are repossessions/corporate work. The bulk of our clients are private clients who approach us directly or through their solicitor. We offer solicitors a joint agent fee in these cases, providing an often unexpected income stream.
Auctioning a property is a more secure method of sale. The benefits are predominantly for the vendor – a non-refundable deposit, and a quick turnaround of sale (seven to 28 days). However, there is an agreement, unspoken, that occurs between buyer and seller here – that although the buyer purchases under terms that benefit the seller more, the seller is offering a property that has been reduced in price for auction, or would not be available anywhere else. It is for these reasons and more that we hold a database of upwards of 100,000 motivated buyers at any one time.
Buyers at auction are not just bargain hunters. They come from every background, just like an estate agent’s own pot of buyers. Where we differ is in the volumes of particular types of buyer. The three main categories are landlords, developers and investors. Our database holds a far higher percentage of international and domestic buyers of this type, and their agents. Of course we still have a huge stock of residential buyers, who are the most likely to impulse bid at auction, but our main buyers come from the previous three categories. Quite often these buyers will not view and will base their purchase on the home report and legal pack they are sent prior to auction night. Our legal partners are key in helping us achieve a sale by timeous production of the legal packs.
It is important to note that any property can be entered into auction. We often achieve higher than home report value on residential properties in good locations. The auction is not a final choice for a regular property – we have sold from £2,000 to £1,000,000 without any issue being raised about the terms of purchase. Quite often, the 10% cash deposit will be used in a mortgage, but the bulk of buyers are cash only, removing the slowing of the timescale for completion.
Even so, there are properties that are most (if not solely) applicable to auction. Some examples of these are:
- Properties that have remained on the market for some time.
- Properties that must be sold quickly as per vendor’s request, e.g. distressed sale.
- Properties with a tenant in place, to be sold as such.
- Properties in lower price brackets (under £100,000).
- Properties that have had adverse survey reports.
- Properties where values are difficult to ascertain from comparables.
- Properties not suitable for mortgage purposes, e.g. non-standard construction.
- Plots/properties that have title or access issues.
- Unusual properties that have a limited marketplace.
- Land with no planning, or slim if any likelihood of ever receiving planning.
There will always be a place for a credible property auction house in the Scottish market, and now that we are established, we expect that our partnerships with the legal practices of Scotland will continue in a positive way. We also expect, in the troubled times ahead during Brexit, that our market share will increase, so we are sure to be more prolific in the housing market in 2018.