Chinks in the market

The recent Allsop auction results had a sales rate of 76%, this leaves 53 properties left unsold, from the 215 initially offered.
 
This auctioneer in the past used to have results of 90% plus. Obviously, this is an indication of the market slowing, but also that the reserve prices set are not realistic. A property is always worth something. There is a disparity between what the sellers are expecting and what the market is prepared to pay.
 
Many of these unsold lots belong to administrators, and housing associations. Administrators generally have to sell; if the property remains unsold in the auction, this leaves the door open for them to take a bid post auction. There is justification for taking the lower than expected bid.
 
There are times housing associations have to sell, sometimes for accounting purposes, their liquidity position may need to be improved. I recall an auctioneer we used to work with heavily calling me up and saying this housing association needed to exchange on an asset urgently. It was a freehold block in Kings Cross for £350K – a killer deal.
 
Auctions are the often favoured means to sell repossessions and for charities, and associations due to the transparency of the process. Everyone is free to engage and bid, there are no barriers to entry.
 
The properties which remain unsold could be perceived to be the bottom of the barrel, the stock nobody was prepared to buy. Therefore, not worthy of attention; better to focus on the fresh stock of the up and coming auctions.
 
In this market, which is creaking and adjusting, my feeling is there will be many bargains to be had from the ‘unwanted’ unsold stock.
 
There are some markers which can be used to shift through the unsold lots. One is when a property is listed in the wrong auction, for example, something in Southampton listed in a London focused auctioneer. This is less so the case now, when everything thing is listed online. Though I believe it still occurs. This property is likely to go cheaper than if listed in the local auction. Perhaps due to the segment of end users who would never think to purchase in an auction unless they had seen the board outside the property on a school run.
 
Another is when the tenancy is listed as ‘unknown’ especially the case with repossessions, where the person who has been foreclosed doesn’t want to share the tenancy details. The administrators are forced to sell the property listed as tenancy ‘unknown’, this can devalue the property to as much as half price. Recently, we sourced a property where this was the case, but we had inside knowledge that this was an AST. So, we managed to get 30% off.
 
There are times when properties have been measured incorrectly leading to a lower valuation. For example, a square building with three floors generally does not have a different square footage for every floor, however this has occurred, and will occur. There is also some confusion regarding the different descriptions of net internal areas, which contribute to this.
 
The above is applicable to both live and unsold lots. It serves as a tried and tested filter, but is by no means exhaustive.