19th August 2020
Uncertain property market makes savvy sellers turn to auction
As house sellers find themselves accepting an average of £13,000 below the asking price on the open market, national valuer Jim Demitriou suggests they could be better off giving auction a try.
When selling a property by private treaty – that is, in the traditional manner via an estate agent – there’s a general understanding in England and Wales that some haggling will take place (it’s different in Scotland where asking prices are generally “offers over”). Sellers accept they are likely to accept an offer lower than the asking price.
Now research by comparison website GetAgent has shown that on average, sellers can expect to achieve 95.8% of the asking price in the current climate, with an average reduction of £13,300 off an original average asking price of £319,789.
There are regional variations, of course, with the picture quite bright in Sheffield, which experienced the smallest reductions, achieving an average of 99.2% of asking prices.
It is the very different markets of Gwynedd and Westminster which are suffering the most. Both areas saw properties sell for an average of 92.5% of their asking prices, which translates to a £15,135 reduction off a Gwynedd property and a staggering £71,436 off a Westminster property.
When I read this report, the first thing that sprang to mind was that some sellers are compromising a great deal on price but are still at the mercy of the uncertainty of the private treaty market. Conveyancing delays and broken chains can all prolong the process, meaning their properties could spend many months on the market, with the sale falling through at the end of it. All that time, stress and effort for a lot less money than they wanted.
Naturally, I think they would be much better off selling with SDL Auctions.
Sellers who are new to auction will often tell me they are concerned they will have to sell their property for less than it’s worth. I always reassure them that they can set a reserve price to protect themselves from this eventuality and that this year our properties have sold for an average of 15% above the *guide price.
Yes, an auction valuation will likely price your property lower than an estate agent would. But both types of valuations are a starting point; the final sale price of a private treaty property is generally lower than the asking price, while the final sale price of an auction property is generally higher than the guide.
The guide price is always within 10% of the reserve and, by making this attractive to potential buyers, interest is generated in the property, which can result in competitive bidding driving up the price.
The GetAgent data has highlighted that price compromises may sometimes be necessary to sell a property in the current climate – but I firmly believe that if you’re compromising on price, you shouldn’t have to compromise on anything else as well.
In an auction sale, there’s no compromise when it comes to speed and certainty. You don’t have to worry about broken chains, delays and fall-throughs because contracts are exchanged immediately on the fall of the hammer – and the buyer will usually get the keys a month later. Our fall-through rate is virtually zero.
The property market is currently experiencing a flurry of activity as lockdown restrictions are eased in most parts of the country, but there is no hiding from the fact that most experts are predicting a global recession as a result of the coronavirus pandemic.
This means the longer your property remains on the market, the more uncertain a sale becomes because lenders are likely to start down-valuing properties, reducing the amount they are willing to lend the buyer and jeopardising the sale.
We’ve already seen savvy sellers turn to auction because they are concerned a recession could delay or damage their chances of selling on the open market.
If you want to sell your property this year, it makes sense to strike now by selling in one of our national property auctions while buyer demand is high and before the market potentially takes a downturn.
Selling your property in one of our auctions gives you the speed and certainty that you simply cannot expect on the open market. And, if you’re going to have to compromise on price anyway, why not give your property its best chance by marketing it to our huge network of serious buyers?
To find out more about auctions or to request a free, no-obligation auction valuation of your property, please do get in touch by clicking here or calling the team on 0800 046 5454.