Auctions are well-recognised as the ideal place to sell property quicker and more efficiently compared to using an estate agency.
Yet there are times when a particular lot may not attract as much interest as originally expected. As a result, there may only be a sole bidder.
In this article, we explore why this may happen and what auction sellers can do during and after the bidding process should such a situation arise…
Why May There Only Be One Bidder at an Auction?
The first thing to check is how well the auction property has been marketed locally and nationally. If it’s buried deep in the auction catalogue or the auctioneer has not published the lot on the main portals (such as Rightmove, Zoopla and On the Market), there’s a good chance it’s not getting the right kind of exposure.
Here at Property Solvers Auctions, we also have a wide database of active investors and auction buyers. We also market properties on a number of niche portals.
More often than not, however, a lack of multiple bidders stems from an over elevated price set prior to the auction.
There’s an industry adage that states that “a property is worth what someone is willing to pay”.
As with many consumable goods and services, it often stands to reason that if a property is marketed at too high a price – buyers will be disinterested.
For example, if a property needs renovation or extensive repairs, the costs of doing the works should be factored into the price.
Similarly, legal issues such as encumbrances, restrictive covenants, positive / negative easem*nts, short leases amongst others will all influence whether bidders will actively pursue a property.
Other times, if the property is deemed to be a “distressed sale” buyers may be more cautious.
As often happens in the estate agency industry, many auctioneers attract seller clients by promising high sales prices. The idea is then to chip away at the value to get to something that’s more in touch with the market That’s why it’s common to see properties going through several auction cycles.
Understand Real Auction Market Trends
Our view is that it’s best to be realistic about auction valuations from the start. This often generates the most amount of bidding interest and better prices.
Indeed, we often adopt a “price to entice” strategy where we set the guide at slightly lower than the auction market value. As the auction plays out, we can build momentum amongst multiple bidders – creating a level of excitement and fear of missing out. Meanwhile, the seller can be comfortable with the fact that the reserve (minimum) price is set.
Properties, under this strategy, often end up going for well-above guide prices – leaving our seller clients very happy with the results!
What to Do If There’s Only One Bidder?
Although there may be some pre-auction bids (often under the guide price), only one bidder interested in the lot isn’t usually a good sign.
Most auctioneers have a starting price for the lot. The aim here is to attract initial bids from which the price can be driven up. If there is only one bidder, unless the starting price is the same as the reserve, there’s a fair chance that the property will not sell.
However, some auction houses engage in a (completely legal) process called “off the wall” bidding. This is effectively where the auctioneer can place bids up to – but not including – the reserve (minimum) price.
For example, let’s say the sole bidder has bid £96,000 on a property. The reserve price is set at £100,000. The auctioneer can then bid at £97,000. This would hopefully encourage the sole bidder to go up to £98,000 and the auctioneer then bids to £99,000. The sole bidder then bids to £100,000, the reserve is met and the property is sold.
The success of this strategy, therefore, depends on how keen the sole bidder is. The maximum price achievable will be the reserve price (set pre-auction).
Make Sure the Auctioneer Has Spoken to Everyone That’s Been in Touch
Some disorganised property auction services fail to contact interested parties or miss their emails / messages. There’s anecdotal evidence that up to 50% of such enquiries are missed, particularly amongst the larger operators.
It’s therefore worth asking the auctioneer admin team to make sure they have checked things properly. There may well be interested buyers who can boost the number of active bidders for the lot.
Here at Property Solvers Auctions, we run a 24/7 booking line and have specific alerts of enquiries that come through our own auction platform or through Rightmove, Zoopla or the many other portals we advertise on. This means we never miss a beat and can maximise our seller client’s chances of success.
What If the Property Has Not Reached the Reserve Price (with Only One Bidder)
The first port of call after the close of the bidding window is for the auctioneer to contact the sole bidder.
As they will not know what the reserve price is, the auctioneer can aim towards that figure as a minimum.
There may also be other post-auction buyers that express interest.
Note that, although these buyers may feel that the odds are stacked in their favour, sellers can simply reject any offer they’re not happy with.
Some buyers may request for the sale to be under private treaty terms which, generally speaking, gives them more control. In such circ*mstances, the auctioneer should insist that the buyer proceeds under auction conditions.
If the negotiations reach a dead end, we would usually recommend relisting the auction. Here, much would depend on whether you’re using a live or online auction house. With the former, you may have to wait for a suitable slot (which will depend on how busy they are). Online auction houses, however, should be able to relist the property straightaway.
Either way, we would suggest setting the guide and reserve prices lower. This is likely to attract more bids the next time around.
You may also wish to swap to a different auction house, particularly if you feel underwhelmed with the level of service you’ve been getting.
What About Using a Quick Cash Sale Company Instead?
It’s certainly worth considering and something we offer here at Property Solvers.
Much, however, will depend on your minimum acceptable price. Most reputable firms will offer between 80% and 75% of the property’s fair market value. As it’s a private sale, there will be no auction sales fees to pay. Most companies in this sector will also cover your legal costs.
A key benefit is that the sale can be done in dusted in under 28 days. In short – whilst not for every seller – it’s a simple, fast and hassle-free solution.
