Why are property auctions shrouded in secrecy and considered to be a specialist process reserved for experts and those such as developers, landlords, professional investors and the like?
Those people would rather like to keep it that way. It’s in their interest to keep the whole process rather quiet because they make a killing out of this system so why would they want anyone else involved, disturbing their comfortable existence and cashing-in?
The truth is no-one is excluded from participating in property auctions and more and more people are now discovering this for themselves. Further, for many years auction houses themselves were content with the status quo. They were only too pleased to deal with regular clientele.
There existed somewhat of a ‘clubby’ atmosphere to the proceedings. Now, most auction houses have begun to open their doors a little wider and accept the non-professional, the amateur, even the casual observer mainly due to public pressure.
It is rather difficult for property auctioneers. On the one hand they need to be seen to be being open and fair, and on the other they have their business to protect. Too high a profile might upset their clients – the organisations and individuals who quietly pass surplus properties through their sales. Building societies and banks want to keep the disposal of embarrassing and awkward repossessions as quiet as humanly possible, for obvious reasons but they want the cash, the equity that bricks and mortar represents, to lend to someone else.
They have no interest in empty properties, neither is there any interest being paid to them.
Then there are maintenance costs to consider, insurances, security, dilapidations. To place repossessions in estate agent’s windows would assuredly depress the housing market and win them no friends.
Not the best way to drum-up potential new business, plus it would serve to anger existing borrowers.
Selling quietly at auctions serves them well. They don’t need the full market value because mortgage repayments have already been made and deposits retained, and any and all losses are fully insured.
Financial institutions are not stupid. They simply can’t lose. And because they’re insured the prices fetched at auction are almost irrelevant. All they desire is to speedily dispose of what they consider to be a liability in exchange for cash to loan out.