What is This? (Feature in auction property)

RHemmings

Kim_13 said:

To bid, the auctioneers required the usual proof of identity and residency and a card on file to pay a 10% deposit (which they passed to the solicitors less their fees) and a buyer’s fee, but don’t check that the bidder is good for the amount of money they’re bidding. They charged 50% commission on any sale that failed to complete, but my understanding was that the remainder of the 10% would have been released had the sale not completed, as the buyer was at fault (with the auctioneers then having to refund 50% of the commission they had taken in advance.)



Any issues on the seller’s side would probably be found after entries close but before the auction date itself - several lots were showing as postponed when I followed the auction online on the day.

I'm not sure I understand the first quoted (part) paragraph above. Could you please explain what the 50% commissions are being charged on? 

One house in tomorrow's auction has just had its particulars updated. While it's a standard-looking 3-bed semi, it turns out that it's leasehold and only has 11 years left on the lease. The listing says that the house will be freehold on completion, and the particulars also have  a sample contract to extend the lease, where the amount being charged will be more than £63,000. While the house is now advertised as freehold on completion, if I had paid for a survey on that house, I would be ... very concerned. Hopefully if I had been serious about bidding on that, I would have picked up the issue with the title register early on. Maybe. However, given that there are clearly buyers who don't even read all the terms of the contract of sale and get surprised by fees, I'm guessing that there could easily be potential buyers of this property who didn't twig as to the leasehold status of the house. 

There is a title register in the legal pack, but it appears to be the title register for the freehold land, not the leasehold house. It does have multiple addresses on it, after the headline address which is just this house. I checked online, and on the Land Registry it says that there are two documents available, but one seems to be missing from online, and only the freehold is visible. 

https://www.bondwolfe.com/auctions/properties/239857-property-auction-birmingham/

According to Zoopla, this house was listed for £120k in November 2023. In the stored listing, it's mentioned that the house is leasehold and has 14 years remaining on the lease. https://www.zoopla.co.uk/property-history/93-falconhurst-road/selly-oak/birmingham/b29-6sb/66103825/  

Similar sized houses in the same road all easily go for well over £200k, but they generally look better than this one. 

The contract of sale says that completion has to occur by 1pm on the designated day. I would hope that the seller's solicitors would agree to a completion day earlier than the day that has that time deadline. Hope. 

Note: I am not going to be bidding on this house or any other auction property in the immediate future. I'm just doing a bit of practice research ... which may or may not come to anything. 

EDIT: This property also appears to be leasehold with an extremely short lease. However, it's described as Freehold in the listing on the Bond Wolfe site. 

https://www.bondwolfe.com/auctions/properties/239835-property-auction-birmingham/

Kim_13

RHemmings said:

Kim_13 said:

To bid, the auctioneers required the usual proof of identity and residency and a card on file to pay a 10% deposit (which they passed to the solicitors less their fees) and a buyer’s fee, but don’t check that the bidder is good for the amount of money they’re bidding. They charged 50% commission on any sale that failed to complete, but my understanding was that the remainder of the 10% would have been released had the sale not completed, as the buyer was at fault (with the auctioneers then having to refund 50% of the commission they had taken in advance.)



Any issues on the seller’s side would probably be found after entries close but before the auction date itself - several lots were showing as postponed when I followed the auction online on the day.

I'm not sure I understand the first quoted (part) paragraph above. Could you please explain what the 50% commissions are being charged on? 

One house in tomorrow's auction has just had its particulars updated. While it's a standard-looking 3-bed semi, it turns out that it's leasehold and only has 11 years left on the lease. The listing says that the house will be freehold on completion, and the particulars also have  a sample contract to extend the lease, where the amount being charged will be more than £63,000. While the house is now advertised as freehold on completion, if I had paid for a survey on that house, I would be ... very concerned. Hopefully if I had been serious about bidding on that, I would have picked up the issue with the title register early on. Maybe. However, given that there are clearly buyers who don't even read all the terms of the contract of sale and get surprised by fees, I'm guessing that there could easily be potential buyers of this property who didn't twig as to the leasehold status of the house. 

There is a title register in the legal pack, but it appears to be the title register for the freehold land, not the leasehold house. It does have multiple addresses on it, after the headline address which is just this house. I checked online, and on the Land Registry it says that there are two documents available, but one seems to be missing from online, and only the freehold is visible. 

https://www.bondwolfe.com/auctions/properties/239857-property-auction-birmingham/

According to Zoopla, this house was listed for £120k in November 2023. In the stored listing, it's mentioned that the house is leasehold and has 14 years remaining on the lease. https://www.zoopla.co.uk/property-history/93-falconhurst-road/selly-oak/birmingham/b29-6sb/66103825/  

Similar sized houses in the same road all easily go for well over £200k, but they generally look better than this one. 

The contract of sale says that completion has to occur by 1pm on the designated day. I would hope that the seller's solicitors would agree to a completion day earlier than the day that has that time deadline. Hope. 

Note: I am not going to be bidding on this house or any other auction property in the immediate future. I'm just doing a bit of practice research ... which may or may not come to anything. 

EDIT: This property also appears to be leasehold with an extremely short lease. However, it's described as Freehold in the listing on the Bond Wolfe site. 

https://www.bondwolfe.com/auctions/properties/239835-property-auction-birmingham/

The auction house I have knowledge of charged half of their usual rate of commission (around 2%) where contracts had been exchanged (i.e. they received a bid at or above the reserve) but the sale did not complete. So in the case of this Bond Wolfe property, where the most likely scenario is that the sale didn’t complete in December, had they had the same clause, they would have charged the seller £1,720 on the sale that didn’t happen (1% on £172k.) 

I wouldn’t touch this auction house with a barge pole - their marketing period is 3 weeks, so they’ve had a legal pack for the property for at least that long. Particulars shouldn’t be being updated the night before the auction.

eddddy

Kim_13 said:

I wouldn’t touch this auction house with a barge pole - their marketing period is 3 weeks, so they’ve had a legal pack for the property for at least that long. Particulars shouldn’t be being updated the night before the auction.

I think you're criticising the wrong people. It sounds like you haven't really grasped what Auction houses do.  They just sell whatever a seller is offering.

The auction house don't tell sellers what documents they should put in a legal pack, or what those documents should say, or when the seller should provide those documents.

If legal pack documents aren't available, or they turn up late, or they have late changes - that's down to the seller, not the auction house. The auction house simply makes documents available as and when the seller provides them.



And quite often a seller will enter a property into an auction, say, 2 or 3 weeks before the auction date - then they (or their solicitor) rush to get the legal pack ready - sometimes getting them out just a few days before the auction.

I've even been to auctions where legal pack updates are still being provided on the morning of the sale.



(FWIW, I took a bit of a risk and entered a property into an auction at the same time as instructing a solicitor to prepare a legal pack. There were problems and the legal pack still wasn't ready 3 days before the sale, so I had to withdraw the property from the sale.

But fortunately, the legal pack was ready a few days after the auction, and the auctioneers got an acceptable post-sale offer.)

Kim_13

eddddy said:

Kim_13 said:

I wouldn’t touch this auction house with a barge pole - their marketing period is 3 weeks, so they’ve had a legal pack for the property for at least that long. Particulars shouldn’t be being updated the night before the auction.

I think you're criticising the wrong people. It sounds like you haven't really grasped what Auction houses do.  They just sell whatever a seller is offering.

The auction house don't tell sellers what documents they should put in a legal pack, or what those documents should say, or when the seller should provide those documents.

If legal pack documents aren't available, or they turn up late, or they have late changes - that's down to the seller, not the auction house. The auction house simply makes documents available as and when the seller provides them.



And quite often a seller will enter a property into an auction, say, 2 or 3 weeks before the auction date - then they (or their solicitor) rush to get the legal pack ready - sometimes getting them out just a few days before the auction.

I've even been to auctions where legal pack updates are still being provided on the morning of the sale.



(FWIW, I took a bit of a risk and entered a property into an auction at the same time as instructing a solicitor to prepare a legal pack. There were problems and the legal pack still wasn't ready 3 days before the sale, so I had to withdraw the property from the sale.

But fortunately, the legal pack was ready a few days after the auction, and the auctioneers got an acceptable post-sale offer.)

I can only speak from the experience of the auctioneers my family used, but they did set a deadline on the legal pack (though I appreciate that probably didn’t stop sellers making additions later, if they were short on time.) They weren’t perfect by any means but they were a lot more professional than Bond Wolfe appear to be. Guide prices were realistic estimates and not the insanely low figures seen here.

eddddy

Kim_13 said:

I can only speak from the experience of the auctioneers my family used, but they did set a deadline on the legal pack (though I appreciate that probably didn’t stop sellers making additions later, if they were short on time.) They weren’t perfect by any means but they were a lot more professional than Bond Wolfe appear to be. Guide prices were realistic estimates and not the insanely low figures seen here.

As I say, I don't see anything unusual about Bond Wolf compared to other traditional property auctions.

I think a lot of people just don't realise how risky (and 'scary') traditional property auctions can be. So maybe it's coming as a bit of a shock to you and @RHemmings.

RHemmings

eddddy said:

Kim_13 said:

I can only speak from the experience of the auctioneers my family used, but they did set a deadline on the legal pack (though I appreciate that probably didn’t stop sellers making additions later, if they were short on time.) They weren’t perfect by any means but they were a lot more professional than Bond Wolfe appear to be. Guide prices were realistic estimates and not the insanely low figures seen here.

As I say, I don't see anything unusual about Bond Wolf compared to other traditional property auctions.

I think a lot of people just don't realise how risky (and 'scary') traditional property auctions can be. So maybe it's coming as a bit of a shock to you and @RHemmings.

For me, I wouldn't describe it as a shock. But, my eyebrows have been cynically rising quite often. The biggest surprise was the old semis and terraced houses that are leasehold and very very short leases remaining. I am aware that there was a time whereby newbuild estates were being sold leasehold, but I didn't know that this happened in the 1930s. 

I would say that my current situation is evaluating the risk and learning what can go wrong. But, this is a mental exercise (in conversation I would use another word than 'exercise'), and I have no intention of buying anything at the current time. 

For Allsops yesterday, there were some houses selling for prices that I would never expect to be possible anywhere in the country. E.g. £20-30k. Clearly there will be reasons for this. I checked the rental figures for places such as Hartlepool, and they are typically in the £500pcm mark. I wouldn't assume that the houses that can be purchased for £30k would achieve that without (or perhaps even with) renovation. Note: I'm not planning to BTL, just interested in understanding the market. 

Asking prices for AirBnB in Hartlepool seem quite high. I notice there is what at first glance appears to be a nice beach and other marine attractions. If I was serious about buying a house in Hartlepool to rent out or AirBnB (would have to subcontract maintenance out), then I'd want to go up there and spend at least some days there. Probably during the summer. 

While I could look back in time, I think I'm going to watch auctions going forward over time. The non-standard construction house being sold by Allsops in Anstey (nearby village) 'sold prior'. So, if I had e.g. booked a survey, that money would have gone down the toilet. I'm also going to have to wait a long time to see how much it sold for. 

The legal documents for Bond Wolfe started appearing on the 14th of March, for an auction on the 26th. Some were some days later (can't remember, but can look it up). I only had a small number of properties on my watchlist, and quite a few of them had updated documents, including as late as yesterday for an auction today. So, this is based on a small sample. 

While there is some variation in the documents, I note that the contract of sale is often pretty much the same, and I presume that Bond Wolfe provide a template for that which many sellers use. I'm guessing if so, then this includes the common £5995 mystery payment to the seller. 

I'm interested in the house in Anstey Lane selling today, to see what it sells for. As far as I can see - knowing the area well, having seen inside a variety of houses in that road, viewing the house from the outside, checking the documents - I personally believe it's lower risk. But, I could easily be wrong. Not in any way saying that I'm (yet?) capable of sufficiently evaluating the risk. 

RHemmings

Just an update about the sold prices.

The house with the picture of the unknown 'thing' in the OP in this thread sold for £132,500. This is £39,500 less than it sold for last auction. If, as has been suggested in this thread, the previous buyer may not have completed in time and be on the hook for the shortfall, that's a lot of shortfall. 

The house in Anstey Lane that was my No. 1. bellwether for auctions sold for £180k. This is £15k more than my rough prediction of £165k, so I was inaccurate. I was comparing this to another house in the same road which went on for £210k on the open market but which then went under £200k (£195k?) before eventually selling. However, the auction property is I feel better. So, maybe £210-220k on the open market compared to £180k at auction. Maybe. If I had bought that house (in an alternate universe where I hadn't yet bought a house) and it was generally OK then I would think I had a bargain. However, that's a post-risk-reveal situation and bidding is pre-risk-reveal. 

The house in Selly Oak in Birmingham that was a short leasehold with a claim of 'freehold on completion' sold for £202k. I don't know prices in Selly Oak. There's another similar but better looking house in Selly Oak that sold in the same auction for £394k, but I'm not confident that it's comparable. When I have the time I'll check out Selly Oak prices. 

When I tried to connect to the auction site, I could see the price rising in real time, but the video to the auction room doesn't work. It's just a black silent rectangle. The problem with this is that if any changes to the particulars were mentioned by the auctioneer before bidding, that I wouldn't have been able to hear them. Hence, even if I had been planning to bid, that would have stopped me.