There are many who would argue that an auction is the best way to establish ‘market value’ despite the fact that the only people who can bid must be ‘cash’ buyers with borrowings in place if necessary but with the ability to put down 10% when the gavel goes down and to pay the balance and complete usually 28 days later. This excludes bidders who have a house to sell but when goods are seized by creditors the law considers an auction as an acceptable way in which to dispose for the property in a timely fashion for fair value.
So it is interesting to see the results of the Savills auction held last Monday and of lot 68 – Nº62 Westbourne Park Road. This is a shell of a home, as you walk in you can look up through the joists to see the roof. Foxes inhabit the garden and bare wires hang like cobwebs. It’s a proper do’er-up’er.
When I was first offered the home earlier in the summer the guide was £3.75m. It had been touted around at over £4m I believe but I felt it was probably worth around £3.5m – even in the post-Brexit market.
It didn’t sell. It was repossessed and went into Savills auction with a disclosed reserve of £2.5m. 2,650 sqft of potential home seemed to be priced competitively to generate interest.
Most sellers today have a relaxed approach and will sell if they can get their price. Many buyers feel that the market is going their way and will only buy if they think that they are getting a deal. As we have seen in previous downturns as soon as you get a deal agree someone thinks that they have paid too much or sold too cheaply!
So a property at auction being sold by the bank is a rare thing and an oportunity for buyers and sellers to establish exactly where the market is. Nº62 made £3.08m or nearly £1200psf unmodernised. There was talk of high, more complicated bids but this was where the hammer fell. This suggests that whilst there is a market at this price for end users – people who will find an out of work builder who will create a home they want to live in the developers are too scared at this level to take part. The costs of buying, holding, doing the work and the risk that the market will slide further is too much for the speculative buyer. Looking at the bids for this property they chickened out at under £1000psf.
Painful for the previous owner and uncomfortable for those who thought that the market was unassailable but everyone can now see what the real value of an unmodernised family home in West London is now. Not as much as many people thought, apparently!