A slight twitch or a scratch of the head and I could have been the proud owner of a convenience store in Manchester. But, luckily, my expense account isn't any worse off and all I came away with from my first auction experience was the lowdown on buying and selling retail property.
And it's not as scary as you might think. For starters, it removes a lot of the hassle often experienced when buying property. Once the hammer goes down, it's a done deal - no gazumping (when a seller accepts a higher offer on a property that they have already agreed in principle to sell to someone else), no gazundering (when a buyer reduces his offer just before contracts are exchanged) and none of the legal to-ing and fro-ing between solicitors, because everything a buyer needs to know about the property is ready prepared and free to view before and during the auction.
Auction catalogues are commonly available six weeks before the auction, giving buyers the chance to visit the property before they bid. And legal packs - similar to the government's proposed Home Information Packs which will become a requirement in June 2007 -provide buyers with all the information they need to make an informed decision on whether or not to bid. Websites like propertymall.com carry dates of forthcoming auctions.
Jason Birch, managing director of auctioneers Harman Healy, part of the Erinaceous Group, says: "When selling at auction, you just present all the facts to the market and bidders make their own decisions. Anyone can walk in here and stick their hand up and go away with an investment."
He adds: "There's a theory that you can buy at a discount in the residential market, but it doesn't really happen like that in the commercial sector. Buyers tend to have done their homework, are more clued up, and it's more of a traditional way of doing business."
Felix Rigg, auctioneer at Harman Healy, says there are a number of benefits to buying and selling at auction. "The number one benefit is certainty. When the hammer comes down the buyer is entering into a legal contract. There's no gazumping or gazundering and that protects both the buyer and seller.
"From the buyer's point of view, they have access to a lot of properties they wouldn't necessarily hear about. You don't have to be my best friend to get a good deal."
Sellers obviously have to pay for such exposure and the auctioneers usually pass on the costs of marketing, printing the catalogue and costs of hiring the auction room in a seller's fee (Harman Healy charges £1,100 plus VAT). This will have to be paid even if the property doesn't sell. Auctioneers also take a percentage of the sale cost - Harman Healy's fee is 2%.
Rigg adds that there are three key things to do before bidding: "Inspect the property; read the catalogue, conditions of sale and the small print; and get advice from professionals - solicitors, surveyors and property valuers or agents. If you do this, you won't make too many mistakes. There's no such thing as silly questions, only silly mistakes."
One other thing to bear in mind is the guide price. This is an estimate of what the property might be worth, but it's generally priced on the lower side to entice bidders to the auction. "Sometimes it goes for less, but usually more," says Jason Birch. "The auctioneer might have a figure in mind but sometimes it can go way over and they'd say 'I didn't see that one coming'. Someone or a few people might have spotted a niche and that's bumped the price up."
One financial adviser at the Harman Healy auction advises potential bidders to take care when looking at the guide price - it's easy to get carried away. "Some people make the mistake of looking at the guide price, thinking they can get the property for that. Auction houses guide lower to get interest - it's a marketing tool - but people often think that's the purchase price. You shouldn't overgear yourselves. You have to have a limit and stick to it no matter what."
An auction has a very formalised structure. Before the auction kicks off, pre-auction announcements are made. This explains the conduct and running of the auction and the member of the auction team highlights any lots that have been withdrawn and will advise potential buyers to read the general conditions.
Any lots with nil reserve will also be highlighted at this point. Nil reserve is very rare and means that the seller hasn't set a minimum figure for the property to sell at so, theoretically, if you bid a tenner and no one bids higher, you'll get it for that price. On the flip side, if bidding doesn't meet a set reserve, the property will be left unsold.
Pre-auction announcements also reiterate that the fall of the gavel signals a legal contract. Once the hammer falls, the buyer must present their ID - to comply with anti-money laundering regulations, Harman Healy Commercial require buyers to provide proof of identity and current residential address - and pay a deposit of 10% or £1,000, whichever is greater. Only personal cheques, bankers drafts or company cheques will be accepted - no cash or cards.
The buyer will then receive a memo of sale and should check all the specific conditions, as well as the addendum for any changes to details in the catalogue. The contract is signed there and then, which should be passed to the lawyers and completed within 20 working days, unless otherwise stipulated in the contract. Buyers must also have insurance in place from the auction date and auction houses usually have an insurance company on hand for last-minute policies.
Tuesday October 17, 2006
Charrison Properties - Charrison properties auction
Time: 16:30
Venue: Novotel London Heathrow
Location: Heathrow, London
Commercial and residential property auction
Wednesday November 1, 2006
Harman Healy - Commercial property auction
Time: 12:00
Venue: BAFTA (the David Lean Room)
Location: 195 Piccadilly, London W1
Monday November 20, 2006
Strettons - Property auction
Time: 11:00
Venue: New Connaught Rooms
Location: London
National auction of commercial and residential property throughout the UK
Tuesday December 12, 2006
Harman Healy - Commercial property auction
Time: 12:00
Venue: BAFTA (The David Lean Room)
Location: 195 Piccadilly, London W1
Tuesday December 12, 2006
Charrison Properties - Charrison properties auction
Time: 16:30
Venue: Novotel London Heathrow
Location: Heathrow, London
Commercial and residential property auction
Source: Propertymall.com
And it's not as scary as you might think. For starters, it removes a lot of the hassle often experienced when buying property. Once the hammer goes down, it's a done deal - no gazumping (when a seller accepts a higher offer on a property that they have already agreed in principle to sell to someone else), no gazundering (when a buyer reduces his offer just before contracts are exchanged) and none of the legal to-ing and fro-ing between solicitors, because everything a buyer needs to know about the property is ready prepared and free to view before and during the auction.
Auction catalogues are commonly available six weeks before the auction, giving buyers the chance to visit the property before they bid. And legal packs - similar to the government's proposed Home Information Packs which will become a requirement in June 2007 -provide buyers with all the information they need to make an informed decision on whether or not to bid. Websites like propertymall.com carry dates of forthcoming auctions.
Jason Birch, managing director of auctioneers Harman Healy, part of the Erinaceous Group, says: "When selling at auction, you just present all the facts to the market and bidders make their own decisions. Anyone can walk in here and stick their hand up and go away with an investment."
He adds: "There's a theory that you can buy at a discount in the residential market, but it doesn't really happen like that in the commercial sector. Buyers tend to have done their homework, are more clued up, and it's more of a traditional way of doing business."
Felix Rigg, auctioneer at Harman Healy, says there are a number of benefits to buying and selling at auction. "The number one benefit is certainty. When the hammer comes down the buyer is entering into a legal contract. There's no gazumping or gazundering and that protects both the buyer and seller.
"From the buyer's point of view, they have access to a lot of properties they wouldn't necessarily hear about. You don't have to be my best friend to get a good deal."
Sellers obviously have to pay for such exposure and the auctioneers usually pass on the costs of marketing, printing the catalogue and costs of hiring the auction room in a seller's fee (Harman Healy charges £1,100 plus VAT). This will have to be paid even if the property doesn't sell. Auctioneers also take a percentage of the sale cost - Harman Healy's fee is 2%.
Rigg adds that there are three key things to do before bidding: "Inspect the property; read the catalogue, conditions of sale and the small print; and get advice from professionals - solicitors, surveyors and property valuers or agents. If you do this, you won't make too many mistakes. There's no such thing as silly questions, only silly mistakes."
One other thing to bear in mind is the guide price. This is an estimate of what the property might be worth, but it's generally priced on the lower side to entice bidders to the auction. "Sometimes it goes for less, but usually more," says Jason Birch. "The auctioneer might have a figure in mind but sometimes it can go way over and they'd say 'I didn't see that one coming'. Someone or a few people might have spotted a niche and that's bumped the price up."
One financial adviser at the Harman Healy auction advises potential bidders to take care when looking at the guide price - it's easy to get carried away. "Some people make the mistake of looking at the guide price, thinking they can get the property for that. Auction houses guide lower to get interest - it's a marketing tool - but people often think that's the purchase price. You shouldn't overgear yourselves. You have to have a limit and stick to it no matter what."
Order of the day
An auction has a very formalised structure. Before the auction kicks off, pre-auction announcements are made. This explains the conduct and running of the auction and the member of the auction team highlights any lots that have been withdrawn and will advise potential buyers to read the general conditions.
Any lots with nil reserve will also be highlighted at this point. Nil reserve is very rare and means that the seller hasn't set a minimum figure for the property to sell at so, theoretically, if you bid a tenner and no one bids higher, you'll get it for that price. On the flip side, if bidding doesn't meet a set reserve, the property will be left unsold.
Pre-auction announcements also reiterate that the fall of the gavel signals a legal contract. Once the hammer falls, the buyer must present their ID - to comply with anti-money laundering regulations, Harman Healy Commercial require buyers to provide proof of identity and current residential address - and pay a deposit of 10% or £1,000, whichever is greater. Only personal cheques, bankers drafts or company cheques will be accepted - no cash or cards.
The buyer will then receive a memo of sale and should check all the specific conditions, as well as the addendum for any changes to details in the catalogue. The contract is signed there and then, which should be passed to the lawyers and completed within 20 working days, unless otherwise stipulated in the contract. Buyers must also have insurance in place from the auction date and auction houses usually have an insurance company on hand for last-minute policies.
Forthcoming auctions
Tuesday October 17, 2006
Charrison Properties - Charrison properties auction
Time: 16:30
Venue: Novotel London Heathrow
Location: Heathrow, London
Commercial and residential property auction
Wednesday November 1, 2006
Harman Healy - Commercial property auction
Time: 12:00
Venue: BAFTA (the David Lean Room)
Location: 195 Piccadilly, London W1
Monday November 20, 2006
Strettons - Property auction
Time: 11:00
Venue: New Connaught Rooms
Location: London
National auction of commercial and residential property throughout the UK
Tuesday December 12, 2006
Harman Healy - Commercial property auction
Time: 12:00
Venue: BAFTA (The David Lean Room)
Location: 195 Piccadilly, London W1
Tuesday December 12, 2006
Charrison Properties - Charrison properties auction
Time: 16:30
Venue: Novotel London Heathrow
Location: Heathrow, London
Commercial and residential property auction
Source: Propertymall.com
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