Insider Property Auction Secrets: Auctioneers’ Knowledge Tips & Hints From The Pro’s
This month I’m feeling in a defensive and protective mood for my Auctions Director and Coordinator. Estate Agents, as a whole, always have to appreciate that they operate for the seller and therefore have to take much, if not all, of the flak for his failings and those of his advisers. Furthermore, since they are the interface with those advisers, the public, the buyers, the enquirers and the purchasers, they can expect to receive criticism for any, and all, the things that might go wrong in the auction experience, whether or not it is the agent’s fault. I will take you through the auction procedures phase by phase emphasising not only what might go wrong but what should go right, so that the insight into their actions might help you to see where there are chinks in their armour, by which you might profit.
So, to start at the very beginning. The auction method is a very quick way of reaching exchange of contracts and completion. This should be to both buyers’ and sellers’ advantage but it inevitably compresses the time for all the steps necessary along the way. This means that the auctioneer ’s office generally has only a very short time in which to amass all the details of the rents and of the title; travel to and visit the properties, check the accommodation, take the photographs; check the information; dictate, type and layout the particulars; have them approved by the vendors, by the solicitors (and sometimes accountants and co-agents); advise on value, agree the guidelines and probably the reserve; prepare the brochure copy and proof- read it. It doesn’t help in all this concentrated period that approximately half (yes half!) the vendors then decide not to proceed or to delay their sale until they feel the market is stronger.
Ideally, this work should all start nine weeks before the auction day, giving staff about four weeks of preparation before the copy goes to the printers.
You will have noticed, however, that most auctioneers provide a timetable of their future composite auctions in their publicity. This almost always states a closing date for entries. This is usually as late as only seven weeks before the auction. This is a very necessary part of their strategy because somehow or other many vendors seem amazed at the length of time for the entry period. The auctioneer can’t, therefore, suggest that he will take long in his lead-in time. Furthermore, about one vendor in five is quite convinced that you only have one property, not a hundred, to deal with and his should only take half a day! He is always the one who can only let you see the property at one time on one day of the week, can’t remember the address or number of his own property (believe me, or believe me not, there are loads of vendors who aren’t sure of the address or, sometimes, even the location of buildings they own).
This is, of course, the type of vendor who also refers you to his solicitor and accountant for the full details and is absolutely amazed that the auctioneer should think that the closing date applies to him . Very often you will see loose sheets included in auction brochures with extra “late” or “A” lots included. Those almost invariably belong to these vendors. The auctioneer, of course, can’t resist going to all the extra trouble of printing the sheets late because this type of seller is always the one who can’t wait for six weeks to the next auction or who is one of your best clients! This type of lot could well be the ones for you to look at seriously. Somehow or other, when they come up in the sale room they never seem to attract as much attention as the lots bound into the brochure proper. Maybe the loose sheets fall out before the bidders see them or remain stuck in the envelope!
Beware, however, when you come to think of buying. Do your homework even more thoroughly than usual. Late lots frequently mean more mistakes by the auctioneer ’s staff, the seller or his other advisers; more truncated information; hurried decisions on value and guidelines and, dare I say, a certain loss of sympathy for the vendor from the office staff. With the dedicated attention to detail you will specially give to these lots, they could prove to be the bargain that’s been waiting for you! Also, you never know that if the seller was in a hurry then, quite possibly, he wants to “get out” fast and therefore also sets a low reserve.
Thus far I have been concentrating on dilatory vendors but the auctioneer ’s office has now reached the stage of preparing the brochure and, most likely, their website.
Crowding in on that are their printing and advertising deadlines. Printers always seem to suffer machine breakdowns, staff with flu or paper shortages whenever my office have been a day late with their copy. Have you ever thought, or even complained, that the adverts have come out too late and have not given you enough time to get the brochure, analyse it, visit your mother-in-law, go shopping, visit the lots, get the survey, consult your builders, organise the finance, check the title and make up your mind as to your maximum bid? I am surprised would-be bidders don’t complain about that shortage of time more often. I would. Unfortunately, this modern preoccupation of everything having to be available instantly is not designed to fit in with the exigencies of what needs done by the auctioneers between instruction and auction day.
Incidentally, do you know that you may frequently need to book-up space in a glossy magazine two months before it’s publication date? How can you enter adverts before you even know you are going to be instructed on the lot? Daily papers are better, but you can sometimes still have to wait a week for space.
But why not treat the disadvantages to your benefit? Delay that affects you also affects and reduces the competition. Make sure you refine your procedures and streamline your operations. Cut out the visit to the mother- in-law, delegate the shopping, appoint the brisk surveyors, solicitors, builders, and finance brokers and stop using the ones who can’t deliver fast.
Finally, of course we come to my bete noir – the solicitors. I must assure you that some of my best friends are solicitors, but those are the efficient ones! Of course it does help if the vendor remembers he has been asked to instruct the solicitor immediately he has instructed the auctioneer and it’s even better if the solicitor then appreciates that the deeds will be ordered quickly from the Building Society or Bank and certainly as soon as he has been instructed by the auctioneers. Urgency does not seem to have been part of the culture of the legal profession, except for those who within their practice have appreciated what auctions are all about.
In my auction house we generally handle all the contracts with our own staff in the auction room, signing- up generally on the standard memorandum. Therefore, we have to have all the legal packs available in our office beforehand ready for transporting to the sale room. Ideally, you will say – and have said so recently in considerable numbers when complaining to Peter Parfait and HPN about delays in being able to inspect such details – the legal pack should be available virtually as soon as the brochure is printed. Very frequently they are not but – like not blaming the messenger who brings the bad news – don’t blame the auctioneers. It is not because of faults in their organisation but faults in the organisations of others that the packs are not available for would-be buyers in plenty of time.
Do you remember in HPN sometime back a very defensive response by one of the national firms of auctioneers who, having had identical criticism, said very much the same sort of thing? It is always my responsibility to look through and check the contracts, searches, special conditions, Land Registry documents and detail of the legal packs on the day before the auction and it’s amazing how many of the local searches and all the other details needed have to be chased on the telephone and are still being faxed in and delivered only 24 hours before the sale. No wonder would– be bidders complain but, as you will have gathered, I am asking you not to blame the auctioneers. But then I would wouldn’t I? At least I am glad to get the grumbles off my chest. Sorry it doesn’t help you – nor, frankly, me – by the time my next sale comes round.
But then, maybe it does help you. Almost invariably the legal packs are available for inspection in the saleroom before the auction. In most cases they are not difficult to interpret. Why not have a look at some next time you are at auction, even if you are not thinking of buying, and get used to them so that when it’s for real you know what you are looking at. Ask questions of the providers about anything you do not understand. Do a little reading on the subject in HPN or elsewhere. Remember that if you found the legal details difficult to get hold of, so did the opposition. A little perspicacity on your part will turn you into the favourite; right out in front.
Just to finish, let me give you an amazing reminiscence from my last sale.
The second lot was a vacant industrial warehouse; single storey, 3000sq ft with a small yard. To my horror, when I first picked up the details I saw the vendor had decided to offer the property at a disclosed reserve of £1,500. Now, as an auctioneer, I hate disclosed reserves – they are like playing poker with your cards uppermost on the table or being in a swimming pool when your trunk elastic goes! You are robbed of all chance of subterfuge.
But I was stuck with the situation and started logically with a request for a bid at £1,500. “No point”, said I, ”in starting lower”, but my audience thought better. Eventually I had to offer them a bid, without responsibility, at £250, to which a brave man on the front row responded! After a lot of chatter, the bidding slowly went up in £250 increments. (They were lucky: I don’t usually take less than £500 increases). And the bidding stopped totally at £1,500, until I started the going, going, gone sequence, whereupon three hands shot up and three bidders all showed excited interest. I immediately increased my increments to £500 and then, as the bidding still continued, hectically, I increased them to £1,000. At £25,000 I stopped to take breath and asked one of the bidders if “he knew where the gold dust was” but he was far too eager to bid to tell me and proceeded to force the last remaining bidder up to £39,000! You see, it’s still fun being an auctioneer – the unexpected can strike when least expected. Like a valuation being totally wrong, perhaps!
I still don’t know why the lot was so valuable to the three bidders, and none of them would tell me afterwards. Imagine the chagrin of the successful bidder when he thinks that on a luckier day he might have bought at £1,500! The only explanation I have for the price is that there must still be some truth in the old saying that “there’s gold in them thar hills”.
What hidden gold will you be able to find at your next auction?
The Secret Auctioneer