While 2020 was an enormously challenging year for everyone in the market, the strong performance of auctions was nothing short of remarkable.
Marios Theophanous is credit manager at London Credit
While 2020 was an enormously challenging year for everyone in the property market, the strong performance of property auctions was nothing short of remarkable.
All across the country, auction houses reported seeing booming business, with record-breaking numbers of buyers resulting in lots flying out of the door.
Auction House, for example, reported selling more than 3,300 lots for the fifth straight year, raising a total of almost £450m. It managed to clear around four in every five property lots. This was by no means an isolated example either, with Savills enjoying a record November, with sales up to that point up by 40% on the same period in 2019.
Activity didn’t tail off with the start of the new year either, with auctions reporting roaring business already in 2021.
The appeal of an auction
One of the big selling points of property auctions is the fact that it’s a great way to pick up a terrific deal. The very nature of auctions means that you aren’t competing with rival buyers in the same way, and it’s not hard to spot a property that may be lacking in a few areas but which can quickly be turned into something desirable, whether to flip for a profit or let out on an ongoing basis.
The speed of the turnaround is an attractive notion too, as transactions have to be completed within 28 days. Brokers know only too well the struggle some of their clients already face in order to complete their planned deals before the stamp duty holiday finishes at the end of March. Yet by going down the auction route, buyers have known that they could dodge this race against time and conclude their purchases long before the deadline passes.
A pandemic-proof way of buying property
Property auctions are not limited to physical auction houses either. We have already seen a succession of online auction houses launch over the last couple of years, before the big auction names followed suit last year, moving their processes online in order to keep functioning in a time of lockdowns.
The ability to add a new project to their portfolio without necessarily having to leave the house was a compelling idea before Covid-19 reached the UK, but now it’s even more inviting. It has also opened up the auction route to a whole host of buyers who might not feel comfortable in a physical auction house, but still see the upside of purchasing a property in this way.
The demand is clearly there from buyers, and is likely to remain for some time to come.
An opportunity for brokers
The big question then is how will these buyers fund their purchases? And while some auction buyers deal in cash, there are still plenty who rely on some form of auction finance.
A quality mortgage broker is a powerful ally for any investor, helping them keep the finances for their business in order. And if those investors are keen to test the waters of a property auction, they will want to make use of a broker’s expertise in finding the right funding for their purchase.
That expertise is all the more valuable given the tight timescales in play with an auction finance purchase and investors need to feel comfortable that they have the best possible funding in place. At London Credit, for example, we can issue an offer prior to the auction so that a potential buyer has surety of funds should their bid be successful
The auction market is blossoming, seeing record levels of interest from buyers and sellers alike, and with the prospects of growing still further. That’s an opportunity that savvy brokers won’t want to miss.
