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The market leader in UK auctions is Allsop and they believe that house repossessions could make up to 80% of all lots in 2009, says Nick Duxbury.
While the rest of the property industry sat on it’s hands, in fact one known investment agent in a top 3 property firm didn’t sell one piece of kit in 2008, there were some very busy people in some niche areas of the industry. Allsop residential auctioneer Gary Murphy was a very busy man last year. Murphy and his 24 strong auction team sold 35% more properties last year than they did in 2007, which was the peak of the market.
How did they do this? Well, Allsop are favoured for their auctions and when banks have to sell a repossessed house they turn to the auction industry to get a quick sale. The lenders moved in to repossess the property at an alarming rate in 2008, for the months of July, August and September there was a repossession every 10 minutes in this country. Allsop received an increases of 25% more repossessed houses, over 2007 figures which meant 75% of their auction stock were from the banks.
Allsop actually view and value each and every property, all 3,003 (repossessed properties) that they sold last year and the 530 offered but not sold. Quite the task when there are very few comparable sales around in a stale and somewhat opaque market. The houses needed a guide price for the auction and many lots are turned down as sellers feel these prices are somewhat too low. Murphy states that for every lot they take on, there is one that we didn’t. Respected and known clients understand the transaction process and values a lot better than those new to the market.
Halifax turned out to be one of the most prolific suppliers of repossessed houses, with 100 lots on average per auction. One could wonder if this is a direct reflection of their lending criteria, sub-prime anyone? Or is it aggressive repossession tactics, maybe a mix of both.
It’s interesting to note that Allsop don’t just sit back and wait for the auction to take place they take each and every lot to the market prior to auction through their catalogue and targeting of local buyers who may be past purchasers, local builders, estate agencies and property firms. This marketing increases the ability to achieve the best price for the property at the repossessed house auctions.
The tactics used by Allsop seem to pay off with an 85% success rate and an increase in the market share from 16% to 20%, they are the market leader.
Interestingly, even with a 40% increase in overall lots sold, turnover has fallen by 6%. Still a very good achievement given the market.
Repossessed house auctions are a great way to purchase a house if you have the time and capital and equally if Allsop are trying to market the properties well prior to auction they may also offer the bank and therefore the distressed home owner fair market value given the circumstances.
It would be great to hear about peoples experiences with Allsop auctions.