Insider Secrets: Auctioneers’ Knowledge Tips & Hints From The Pro’s
I quite frequently remember from the days when I was selling for the British Rail Property Board the long, thin strips of land which they offered which sometimes turned out to be tremendously useful and at other times did not. In the days when I was selling for BR, British Rail had an urgent and justifiable need for the cash and therefore some of their sites were offered before the possibility of obtaining planning consents and negotiating rent reviews or renewals due or shortly renewable had been explored. I feel sure that with more time in the buyers’ hands than in the vendors’, many of those sites with additional research and work by the purchasers showed that they were bargains. There is no need to think that the British Rail Property Board in those days were the only vendors who could put cash readily available to an immediate and appropriate purpose, and it was in their interest overall to see a quick sale. There are plenty of vendors around today who also have the same need. Incidentally, I understand that many of the plots of land previously owned by the British Rail Property Board are now being offered by their successors and are listed in the Internet, and rumours in the profession suggest that only about 2,000 sites and investments are left for sale. Look out for two or three auctions coming up during the year including many of these remaining sites. Evidently the intention is that the majority should be sold before the end of the year - unless the politicians change their policies again!
Apart from frequently being long and thin, when I continue reminiscing about railway holdings I begin to think about how valuable cuttings or holes in the ground can be for taking fill, once you have overcome the problems of planning associated with pollution and the current level of tax on landfill. If we look at the reverse of cuttings and think of old embankments from railway lines closed many years ago, these can often contain valuable fill material for sale on, before the flattened site is ready for a saleable use. I frequently pass a site in Greater Manchester - not a British Rail one - where the lucky purchaser came to tell me what valuable sand that heap contained, and what a bargain he had. That was before I noticed that he had obtained planning consent for a car showroom, making the site even more valuable. It should have been, when I look at the prices on the windscreens of the Mercedes that are now displayed there, with many a model now priced at more than the land cost in the first place. There is the story, not apocryphal, of the six acres of land bought in a West Country seaport, which the purchaser intended to be used by his daughter for horses. The horses presumably now forage elsewhere, since on the site is one of the larger supermarkets - a lucky purchaser indeed. A similarly lucky, but not as profitable purchaser, at one of my auctions recently, bought (after the sale) a municipal lavatory - then closed down - which now hosts a major advertising site adjoining a trunk road junction. It was only last week I was reading of a property about to be auctioned, previously used as a lavatory, which had a planning consent for a café - my taste buds squirm at the thought!
So where do these reminiscences take me? How should I be advising you to weigh up auction catalogues?
Here are a few suggestions:
Are there some small plots of land of obvious value to a larger development? I have not caught up with their subsequent history, but just before Christmas two small plots were sold (if I remember rightly, they were offered without reserve) which had no apparent use. Was one of our readers the lucky individual who bought them, or did they perhaps not sell? I do wonder whether either of those two plots had a ransom value, or were they just a waste of time.
This does prompt me to the next category of property which is often worth researching, and I have seen several letters from readers of HPN who have talked about the matter, and that is properties located in your own area being sold at auctions held outside the district. It is always worthwhile looking at many of the larger brochures, particularly of sales held in London, where occasionally lots might go cheaper because they are being sold outside their geographical area.
I was talking just a little earlier about clients who need immediate cash, and with no time to weigh up the future prospects or research the future of the properties they are offering, and do not have the time perhaps to carry out rent reviews. This leads me on to what should be your constant search for the properties that are being sold by mortgagees in possession. ‘Repossession’ is not necessarily to be considered synonymous with ‘bargain’ - you should still thoroughly and properly research your target - but it appears from their success rate that there are certain finance houses who trim their reserves in the interest of not continuing to hold repossessed houses for a long time, for the sake of reaching a high price. Thorough research of auction results, combined with critical analysis of the auction brochures, may help you to discover these special sources in the future. I must warn you however that in my experience of selling repossessed houses the prospect of obtaining a bargain is not always there, and I saw in roughly one in five cases of repossessed houses offered in my sale room that the price was more than the figure that had been asked for the property when it was offered on the market by private treaty, so don’t be carried away in your bidding merely because you know the property was repossessed. Back to that recommendation - do discipline yourself to fix your upper limit before you start bidding!
And how do you judge that a property is repossessed? Maybe the auctioneer makes the job easy for you and in the brochure it has a phrase similar to “by order of mortgagees in possession”. Quite frequently brochures carry the logo of the finance house for which the property is being sold – Lloyds TSB, Halifax, Santander etc. This of course is likely to be an indication that the property is a repossession, but it will not always be so. Some banks and building societies are very coy about the public knowing that they have repossessed properties, and take considerable steps to avoid it being known, but you can still look for the clues. Does the principal advert for the auction contain a general list of the clients for whom the auctioneers are acting? Do the names of building societies, finance houses, or banks figure in that preliminary part of the advert? Is there an indication that certain properties are being sold on the instructions of an LPA Receiver (LPA is Law of Property Act) or ‘on the instructions of a liquidator ’ or similar?
Without these clues, there can be more subtle indications. The solicitor acting may have as his address the head office of a building society or a bank. Even without that direct indication it is possible that the name of the building from which the solicitor operates is an indication of the Society for which he works - “Nationwide House” or similar. It may even be possible to link the solicitor ’s telephone number quoted, or that quoted for access to the property. If all else fails, an outright enquiry at the auctioneers’ office or at the co-agent’s office may reveal that the lot you are considering is the result of a repossession.
Finally, as a guide to looking for those bargains, how closely are you thinking of the fringe areas of those that are in demand, that are likely to be ‘on the up’? Over my period in practice there have been certain uses that have been in vogue. My immediate thought goes back to petrol stations, post offices and launderettes in the ‘70s and ‘80s, and more recently car wash sites, residential investments, mobile aerial sites, and buying-to-let, at the end of the last century. And lastly, I promised to talk to you about my two recent lots which provoked these reminiscences. In mid-February my brochure started with two lots which are titles to the Lord of the Manor. There has been an increase in sales by auction of such titles recently. Robert Smith, of the Manorial Society, is well-known for his promotion and auctions of this type of title. Although a specialised field, there still are bargains and profits to be made out of buying such titles. The two in my latest brochure are little more than an ego-trip for the buyer since they do not appear to have any extra rights, but it is not unusual for Lord of the Manor titles to include title to road verges, which can subsequently be turned into ransom strips, or at worst produce rent from telegraph poles (or, presumably, in this day and age, mobile telephone aerials). Certain other Lord of the Manor titles contain restrictive covenants which can sometimes produce fruitful negotiations when development or re-development of land in the Manor is taking place.
A few titles include the right to hold a market. It is a specialised field, but well worthy of research for those with a historical bent. The titles are conveyed with a contract and completion in a similar way to the title for ordinary property. They are not registered. The titles date back to medieval times. Of the two that I am selling, the original Manor of Poughley in Berkshire was called a manor in 1366 and there is succession throughout the years right up to date. As far as I know there are no manorial rights attached to the title. The second is the Manor of Knossington in the county of Leicestershire, and here the title starts as early as 1086, which was the date of the Domesday Book, and its ownership has been recorded all the way through to the present day. Any manorial rights that might have existed lapsed by the end of the 19th century. With my sale close to St Valentine’s Day, I did suggest that buying the title of either of these to turn one’s beloved into a Lady of the Manor would be a unique and romantic idea.
The Secret Auctioneer