A Closed Shop?
So why, you may ask, are property auctions shrouded in secrecy and considered to be a specialist process reserved for experts and those 'in-the-know' - developers, landlords, professional investors and the like?

Because...it may not surprise you to learn...those people would rather like to keep it that way. It's in their interest to keep the whole process rather quiet. They're happy making a killing out of the system, so why would they want anyone else involved, disturbing their comfortable existence and cashing-in? If you found gold or struck oil would you put an advert in the paper?

What's more, for many years auction houses themselves were content with the status quo. They were only too pleased to deal with regular clientele, familiar faces who promised not to make waves as long as they were fed a regular diet of juicy deals. There existed somewhat of a 'clubby' atmosphere to the proceedings.

But no-one is excluded from participating in property auctions and more and more people are now discovering these Aladdins Caves for themselves. 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. Indeed some have openly stated that they are now in favour of attracting members of the public to share in the spoils - though you would hardly know it from the insignificant amount of publicity they engage in.

But 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.You see, too high a profile might upset their clients - the organisations and individuals who quietly pass surplus properties through their sales.

Why Properties Come to Auction?
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. That's their business after all.

Placing repossessions in estate agents windows would assuredly depress the housing market and win them no friends. Not the best way to drum-up potential new business, and it would serve to anger existing borrowers. So, 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 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 want is to speedily dispose of what they consider to be a liability in exchange for cash to loan out.

Where do the other Bargains Come from?
Apart from repossessions, there are many other reasons why properties come up for auction. Breweries have to occasionally sell quantities of public houses in order to comply with Monopolies and Mergers Commission criteria,. They can't put them up for sale on the open market for the reasons already discussed.

Other multi-nationals and large companies (BT, water, electricity and gas concerns, the petrol industry etc) own vast areas of our country, buildings and land that are sitting idle. The guaranteed speedy cash from auction sales comes in handy at the end of the tax year when dividends need to be increased to maintain or enhance share prices.

Executors often want a quick return to settle the division of wills. Beneficiaries may be much more interested in getting their bequests immediately rather than having to wait the eternity for a conventional sale to proceed, irrespective of a smaller return.

And you'll find that many fascinating lots are entered by local authorities and government departments who are more interested in not being seen to be giving preferential treatment to individual developers, (and thus open to accusations of sleaze) than in achieving realistic prices.

The truth is that thousands upon thousands of substantially undervalued properties are simply got rid of at knock-down prices, at auctions throughout the country ... every week of the year for a variety of reasons. And encouragingly, the numbers are set to rise.

Back to main Page..