Newsletter 4 – canalside property auctions
Hello again! I hope you’re enjoying the little bursts of sunshine between the showers? I’ve taken advantage of the wind and rain over the last week to design and print some lovely new leaflets. I’ll be out canvassing along the canals as soon as the weather improves. Maybe I’ll see you on the cut!
Have you looked at Kings Lock Cottage on the Grand Union’s Leicester Line yet? With more people enjoying a walk in the countryside than ever before, and with the hospitality business enjoying better turnover this week than it did in the same week pre-pandemic, could this be the perfect time to realise your canalside tearoom dream? There’s already a keen buyer in the pipeline who’s all fired up and working hard on his financials, (commercial mortgages do take a bit longer than residential ones), but at the time of writing this, you could still be in with a chance! You will need to have at least 45% deposit for a commercial mortgage, or cash. If you would like more details, please give me a call on 07891 718211, or drop me an email at firstname.lastname@example.org.
Also, this week I have been on a foray into the fascinating world of property auctions. I’ve sold two of my own properties by auction, and I’ve purchased another that way, so I am no stranger to auction rooms. Now I’m looking for a totally different reason – to find an auction partner for Canalside Homes. I know this topic may not grab your attention straight away, or if you’re a bit like me you immediately think of ‘Homes Under the Hammer’, but bear with me… if you haven’t thought of buying or selling at auctions before, I might just change your mind!
Over the last decade, auctions have changed dramatically. They are no longer the preserve of professional investors and bargain hunters with the availability to attend an auction room in person. Recently auctions have become accessible to a much wider audience of prospective buyers, without any geographical limits. In-room auctions and their online counterparts have both benefited from the development of user friendly online bidding platforms, thanks to unprecedented technological advances in website programming, connectivity, and security.
There has also been a significant change in the kind of properties offered. Auctions are no longer associated solely with bargain basement or problem properties. They are brilliant for sellers looking for a quicker and more secure transaction, or for owners of unique properties which could inspire competitive bidding. Of course, that includes canalside properties!
We are all well used to the concept of a traditional online auction – after all, many of us have bought and sold on eBay. The ‘traditional’ type of auction is unconditional. On eBay, for example, you enter into a legally binding contract to purchase an item when you commit to buy it, or when you have the winning bid. (eBay have different rules for cars and property, where a bid or offer is not binding, but expresses a buyer’s serious interest in the item, but we’ll ignore that for the purposes of this post). For properties in a traditional auction room, just like eBay, the contract is binding when the hammer falls. The buyer is required to exchange contracts within hours of making their winning bid. An online property auction is similar, in that if everything goes to plan it is much faster and more secure than a traditional sale. However, there is not one universal format for online property auctions, and although the timescales are always set in stone, they are not identical. If you are buying via an online auction, it is absolutely critical to read the small print.
You may have heard of the Modern Method of Auction as a common method for buying and selling property using an online auction platform. A more complete definition of a Modern Method of Auction states that the sale is conditional. In a conditional sale, the successful buyer pays a reservation fee to reserve the property, giving them an exclusive option to purchase. The buyer is given a longer timescale to finalise the transaction, typically 28 days to exchange and then a further 28 days to complete. The reservation fees can be very high and they are non refundable. For example, two of the biggest names charge a minimum £6000 reservation fee. Remember, this is an additional payment in excess of the property price, not a deposit! There is a great deal of unrest in the industry over these high reservation fees, and several online auction companies have sprung up to offer an alternative.
It took me a long time to look through all the auction companies offering partnerships with estate agents. I was looking for transparency and fairness; I wanted a user friendly and secure platform suitable for even the most inexperienced of buyers and sellers; I needed an experienced company who would willingly advise my clients on the best approach and guide price for their property; I wanted to retain a strong relationship with my sellers, and finally I wanted to continue to offer my specialist marketing services under my own branding, throughout the sale.
It was quite easy for me to exclude several of the online auction companies, either because their reservation fees were terribly high, or because once my client’s property was handed over to them, I would lose all control. Choosing between the remaining offerings was much harder. In the end I settled on BidX1. From the outset I found them very helpful and supportive, with bags of experience and professionalism, and a genuine air of enthusiasm for working alongside me and my clients. It is not entirely coincidental that the Canal and River Trust uses the same company – BidX1 agreed with me that the synergy could benefit our clients.
Their fees are much fairer too. The seller pays me a 2% commission. The seller doesn’t need to pay BidX1 any entry fees; instead I pay a BidX1 a percentage of my 2% commission. The only other cost to the seller is for the preparation of the legal pack in advance of the sale. They will normally instruct their own solicitor to prepare this, and it will probably cost somewhere around £450. The buyer does pay BidX1 an admin fee, which is BidX1’s equivalent of a reservation fee, but this is only £2000 + vat, not the crazy £6000 or more I have seen elsewhere!
I’m really looking forward to my training session with BidX1 on Friday! If you’d like to know more about my auction services please visit my selling options page or give me a call.