Nowadays, with the rise of the online model, you might be tempted to think that you just need to stick a property online to sell it. But as any property professional knows all too well, there are a number of situations for which the click of a mouse is not enough. And such complex cases happen more frequently than people might imagine.
Let me give you an example. A solicitor recently contacted us at Phillip Arnold Auctions to conduct a formal valuation of a property in a north London borough. The property came to the solicitor with a Court of Protection Order and it was in a very poor condition. The solicitor needed a quick sale to provide funds to keep its elderly owner in care.
Auction was considered to be the most effective route for the sale and the property was entered into the next available auction with a guide price of £300,000. The lot proved very popular, with over 60 legal packs downloaded and an excellent turnout at every viewing session.
Sadly, however, the owner passed away before having the opportunity to benefit from the sale. As a consequence, the property had to be withdrawn from the sale because a probate would now be needed. Luckily, we were able to assist on this matter too, by offering a Red Book Valuation for probate. The solicitor then contacted the owner’s heirs and applied for probate.
After four or five months, the beneficiary and the solicitor agreed that auction was still the best sale option, given the level of interest shown and the opportunity of a prompt sale. Properties in that area were achieving between £550,000 and £600,000 (maximum) on the open market. On the day of the
sale, however, the interest was so high that a proper bidding war began.
Eventually the property went for an outstanding £641,000 – more than doubling its guide price. Both the beneficiary and the solicitor were delighted with the result, and it was in general a good example of how the auction room is the ideal route for selling properties in need of renovation. Offered at the right price, such assets have the potential to achieve incredible results, well above their values on the private treaty market.
Unfortunately, not all sales go so smoothly. In another recent case – and on the back of our experience with valuations like the one just mentioned above – we were appointed by the fixed charge receivers to value a property that resulted from a Proceeds of Crime case linked to tax fraud.
The property featured two adjoining bungalows that could have been offered as either one or two lots. The main bungalow also had planning permission for an extension to the rear to connect the second bungalow. The valuation, though, turned out to be more complicated than I expected.
First of all, the defaulted owner was in jail and was not willing to help. The two tenants were not co-operative either and they did not grant us access to the premises. Effectively, they did not want anyone to come through their door. This is often the case with insolvency proceedings and it can easily take weeks to get into such a property.
Most of the time, you need to talk to the tenants and reassure them that nobody wants them to leave. You also have to explain to them that there is a court order saying you need to evaluate that place and to do so, you would require access. You would need to check the condition of the property and also, more importantly, to obtain records to understand how much rent was being paid. Sadly, letting agents are often extremely unhelpful too.
There are a few tricks of the trade that we would use in such situations. For example, people can easily ignore emails and phone calls but visits are harder to bounce. In this case, it took me months. I personally had to make several trips down to the property at different times of the day to try and talk to the tenants about the sale.
You need a certain amount of experience to talk to people about these matters and a lot of patience not to give up. Eventually, they agreed to let me in so that I could carry out the valuation.
However, the job was not done yet. It became clear that the layout of the second bungalow, the adjoining one, was not suitable for owner-occupancy, but rather for a house in multiple occupation (HMO). Therefore we recommended to sell the property as one lot with a combined reserve price of £400,000.
For clarity, the bungalows were listed as two separate lots with single guide prices for each but with a caveat that the auctioneer reserved the right to sell the properties as one lot. The guide prices were set at £270,000 for the main bungalow and £215,000 for the adjoining one.
The fact that at each step of the process these decisions had to be cleared by the Crown Prosecution Service also complicated the sale and led to a very lengthy process. On the day of the sale, however, the attendance in the room was excellent and eventually the two properties sold as a single lot for a bumper £656,000 – well beyond any expectation. It took almost a year and it was one of the most complex cases I’ve ever dealt with, but the exceptional result was just rewards for all our efforts.
At Phillip Arnold Auctions we deal with these kind of cases fairly regularly, on the back of the reputation we’ve built over many years. We have developed a very good relationship with lawyers and receivers who often recommend us to others, so if a particularly difficult case comes up, Phillip Arnold’s name gets put in the frame. We now even do expert witness work.
There are quite a few auction houses out there that prefer not to take such cases, either because they don’t want to scratch their heads with the complexities that these cases present, or simply because they don’t understand the legal issues and technicalities. But not us; we have all the badges and vast experience to overcome any hurdles along the way.
Ultimately, in our field, professionalism and good manners are essential. Technology is a great tool, but it has its own limitations. You can’t rely just on an online platform when you have to deal with such cases. A computer cannot look into that on its own, because in the end you have to manage people’s expectations. You will always need a human touch.
Phillip Arnold, managing director, Phillip Arnold Auctions
Phillip Arnold Auctions is an established property auction house based in Ealing, London, offering a professional yet friendly auction service for the disposal of private and corporate residential and commercial properties.
PW Perspectives Supplement Winter 2018
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Human touch beats online sales in tricky situations