Auctioning Real Property

Frontmatter

1. Introduction

Abstract

The origin of auctions reaches back into the ancient civilisations and almost certainly came about as a logical extension of barter. It is easy to imagine the scenario of a street trader in some bygone city faced with a throng of people anxious to buy his wares and chancing upon a crude form of auctioning the goods to the highest bidders. Soon others followed his example and gradually over the years disputes and arguments created a crude style and form of auction. From here it was but a small step to adapt the system for the sale of goods to anything for which there was a demand. The auction sale of real property as we know it today has been perfected and honed to its present form over many hundreds of years.

Richard M. Courtenay Lord

2. The Property and the Vendor Client

Abstract

The profession of the auctioneer is one which requires not only the exercise of skill on the rostrum but also the application of knowledge. An oft repeated old adage of working auctioneers is: ‘You are only as good as your last auction.’ How true!

Richard M. Courtenay Lord

3. The Initial Steps

Abstract

The source of instructions will arise in various ways, the most common being through personal contact with your client or their advisors. A frequent comment from many seasoned auctioneers is that their clients have often not even considered auction as a possible method of sale. At this stage the agent will be well advised to suggest the possibility of an auction to the client as a possible method of sale, and to develop this theme once the property has been inspected.

Richard M. Courtenay Lord

4. The Law

Abstract

This chapter sets out to cover the legal aspects of real property auctions in relation to:

Richard M. Courtenay Lord

5. The File and Particulars

Abstract

The auction file is the central clearing house of an auction. There must be a file for each lot for ease of quick reference by all members of the staff and these files need to be kept up to date on a daily basis. Here will be recorded all the detailed information. Today these files are computer based and each firm will have their own tailor‐made software package for handling their particular type and style of auction. Every firm maintains files of correspondence for each lot together with computer records. A typical document on the computer will contain:

Richard M. Courtenay Lord

6. Types of Auction

Abstract

Auction sales fall broadly into three categories. The individual lot, small collective sales of up to a dozen lots, and major collective sales often running into several hundred properties. The last group will be offered in London and major regional centres.

Richard M. Courtenay Lord

7. Marketing Auctions

Abstract

It will be remembered from the preceding chapters that auction sales, by their very nature, are conducted within a strictly limited time scale. The end result is that the auctioneer must have from the outset a clear, pre-agreed plan for the advertising and media press releases. A great deal of thought and planning must be given to this area of activity at an early stage, usually in parallel with the preparation of the draft auction particulars. Furthermore, the costs of the advertising are usually paid by the vendor client and therefore the auctioneer will need to have quoted accurately for this work and obtained specific approval.

Richard M. Courtenay Lord

8. Events Prior to the Auction

Abstract

Unlike private treaty sales, an auction sale to a degree runs under its own momentum and all those involved in the auction team are carried along, hopefully imbued with a strong sense of urgency. This sense of urgency is triggered by the fact that there is an exceptionally tight time-frame within which the lot is marketed and potential bidders are found. Inevitably, would-be buyers will wish to inspect the lot in which they are interested several times; then there will be a whole host of questions arising from these inspections; and, once surveyors, valuers and solicitors for the buyers are involved, yet more queries will be raised. All these have to be answered as quickly as possible. Alongside this activity the auctioneer will be busy trouble-shooting all the multitude of problems which might spring out of the woodwork. Truly in this theatre time is of the essence!

Richard M. Courtenay Lord

9. Setting the Reserve

Abstract

In essence the success or failure of an auction hinges on setting the reserve price at the correct figure. In Chapter 2 reference was made to establishing at the outset whether or not the vendor client was of the same mind as the auctioneer in respect of the realisation price. Put simply, if there was a major divergence of opinion at that stage, then the auctioneer must resolve the issue there and then, otherwise potential disaster hovers in the wings!

Richard M. Courtenay Lord

10. The Auctioneer’s Code of Conduct

Abstract

To the uninitiated man in the street the whole process of an auction, and the authority under which the auctioneer carries out the sale, is shrouded in mystery. The general public views auctions with reservations mainly because historically the workings of the auction process have not been explained and promoted by the landed professions and auctioneers. This situation has changed dramatically over recent years and all the main auctioneers now actively encourage new bidders through the use of explanatory brochures, video films and workshops. For some thinking of attending an auction there remains the fear that if they scratch an ear or even blink, then the auctioneer will take a bid off them! Again there is often a failure to appreciate that the fall of the gavel at, or above, the reserve creates a binding contract. Another frequent misunderstanding is how much they have to pay over on the fall of the gavel — is it 10%, a higher amount or the total sale price?

Richard M. Courtenay Lord

11. Preparations for the Sale Day

Abstract

The long haul from the initial instruction to offer the property for sale by auction is nearly over, but it is at this stage that the auctioneer must yet again check and double check all the facts and figures, together with every single matter that might in some way or other affect the outcome of the auction. As has been stated many times in the preceding chapters, the auctioneer has to be aware consistently of the need to be fully conversant with everything which has a bearing upon the success or otherwise of the auction. This manifests itself in the duty of the auctioneer to be fair and even handed with all parties to the proceedings, not just the vendor client. Over and above this requirement, there is always the overriding prime duty of care to the vendor client.

Richard M. Courtenay Lord

12. Bidding for Buyers

Abstract

In Chapter 10 the relationship between the auctioneer, the vendor client and prospective bidders when asked to bid on their behalf at auction was discussed in terms of internal office systems and procedures. Another scenario arises when an agent is asked to bid for a lot at auction. For most auctioneers, this form of instruction is both a challenge and a pleasure, with the reward being the successful purchase of the lot in the face of keen competition in the room. However, life is not that simple and before rushing off to the sale the agent must take careful steps to regulate the position both with the client and with the auctioneer who will be conducting the auction.

Richard M. Courtenay Lord

13. The Auction

Abstract

After many weeks of preparation the actual day of the auction sale has arrived. For the auctioneer and the team it is not just a case of turning up at the sale venue and taking the sale, but rather there must be a period of careful preparation beforehand to ensure that the very best results are achieved. For the auctioneer with an early evening sale, to work through a busy agency day from the office and then at 5.30 pm to scoop up the file and dash 12 miles to the venue, arriving on the late side and then with an obviously cursory attitude to conduct the auction, is both patently failing in the duty of care to the vendor client and delivering a hammer blow to the goodwill of the firm of auctioneers, let alone demeaning the worth of auction and the standing of the profession.

Richard M. Courtenay Lord

14. After the Auction

Abstract

Once the actual sale is finished the natural reaction is to relax, but the auctioneer’s duties are not yet over. All the contracts or memorandums of sale have to be completed and any interest in the unsold lots handled.

Richard M. Courtenay Lord

15. Moving Forward

Abstract

From the end of the Second World War the growth of London and provincial firms continued with little change over the next two decades. Business activity followed traditional and predictable patterns which had been established over the pre-war years. New technology was adopted as it became available, but few foresaw the major changes that would follow. This led in turn to firms seeking to broaden their base of activities and geographical coverage.

Richard M. Courtenay Lord

Backmatter