A guide to help solicitors advise clients on
the disposal of their unwanted properties
by Nick Cragg, FRICS, FNAEA, FNAVA, FARLA
So the Will has been read and it has been agreed that the old family home must be sold. But how? The local estate agent can put it in the window and, with a fair wind, the right buyer eventually spot it, and – after a few frustrating weeks of haggling – put in an offer.
But there is another option; the auctioneer’s hammer can speed up and simplify the disposal of a property in a deceased estate, at the same time reducing the opportunities for acrimonious disagreements among family beneficiaries.
Chartered surveyors who are also auctioneers are well-placed to provide solicitors and executors with a formal valuation of the property for probate purposes and then to sell it within a matter of weeks at a public auction.
This method of sale is not only fair and transparent but it confirms the true market value of the property on the day that it is sold. Sale by auction can strengthen the solicitor’s position in the event of a family dispute about the disposal of the property. It reduces the scope for disagreement among siblings about the asking price for the former home of a parent who has died or squabbles among several executors about the acceptability of an offer made by a would-be buyer. If that causes delays, the potential purchaser may get fed up waiting and walk away.
Because an auction enables the sale to be completed more quickly than on the open market in most cases, the beneficiaries of the estate receive the proceeds of the sale sooner than they would by placing the property with an estate agent to seek a private treaty buyer. It also means that the deceased estate can be wound up relatively quickly, helping to ensure that the beneficiaries and solicitor’s account is paid sooner than might otherwise be the case!
Having said that, the solicitor’s role is to guide, not persuade clients regarding the best way to sell; that is for the property agent who is an auctioneer with long experience locally.
There are other benefits to be gained by using the auction route to dispose of the property. If one of the beneficiaries of the Will is keen to retain it, he or she has the opportunity to bid and secure it in a manner which is fair and open, allowing no room for others to say that more should have been achieved from the sale.
Furthermore, the swift nature of an auction sale can make the legal and sales processes easier, especially where there may be complications with issues with title or uplift/overage clauses whereby the vendor shares in the future development value of a piece of land.
Clients of family solicitors increasingly are turning to the auction room to help administer estates in a way which is acceptable to all concerned.
Typical is an unnamed client who wished to dispose of his late mother’s home, a 1930s-style non-standard timber frame construction detached bungalow with outbuildings in just over an acre in South Gloucestershire.
Its location was handy for a lake popular with coarse fishing enthusiasts throughout the year, and the property was of interest to developers with plans to replace bungalow with a brand new home designed to respond to current market demand.
The property had been the subject of 20 viewings by the time it went under the hammer and it sold for 28 per cent more than the middle of the auction guide price.
It is doubtful whether such an unmortgageble property would have made that much, that quickly in a conventional private treaty sale.
The types of property ideally suited for sale by auction tend to be out of the ordinary and unlike anything else in the neighbourhood which could assist an accurate valuation. In Gloucestershire and Wiltshire, for example, properties which do well at auction tend to be houses and cottages in need of renovation, but not all.
Typical is the modest ’fifties-built semi-detached house in Gloucester which, despite needing extensive modernisation, attracted more than 70 people to view the property prior to the auction. Fiercely competitive bidding drove the price up by £500 every few seconds, reaching a very satisfactory sale price of £124,000 with exchange of contracts on the fall of the hammer.
In addition to the sale of properties forming part of a deceased estate, including paddocks or building plots – which, by the nature of an auction will appeal to a much wider range of buyers than might spot them in an agent’s window – auctions are ideally suited to charities and executors wishing to dispose of properties. They are rightfully able to claim that they have fulfilled their legal obligation to obtain the “best price” when the sale is by auction.
While it is essential that vendors pay close attention to the advice given by their auctioneer – particularly when it comes to agree the auction guide price and the reserve price for the property – the solicitor has a heavy responsibility as well.
An essential pre-requisite to a successful auction sale is the preparation of a comprehensive auction pack containing, not only the contract and seller’s property information form, but all relevant searches. Typically they may include a Coal Authority search to ensure there is no risk of mining subsidence – not uncommon in parts of South Gloucestershire – and an Environmental Search to check that there are no pollution hazards. Paid for by the vendor, the searches enable a would-be buyer to keep bidding with confidence.
It has to be remembered that the fall of the hammer marks the exchange of contracts; there is no opportunity for subsequent negotiation. But if the last bid is just short of the reserve price, a sale still might be achieved in the sale room where the auctioneer can take a vendors further instruction to accept a price just shy of reserve, and sell under auction rules.
The solicitor present at auction can deal with any unforeseen queries prior to the auction which may help to facilitate a sale, although an experienced auctioneer can often deal with these matters.
Those bidding at auction will already have finance in place, so the delays which can arise when a private treaty purchaser agrees a price, but then has to search for mortgage funding, are avoided and the keys can be handed over to the new owner upon completion of sale, typically 20 working days after auction.
Making life easier for law firms: faced with the problems of looking after a probate property prior to sale, Auction House has launched a dedicated Probate Property Service to take the load off their shoulders. In addition to valuation and auction, the one-stop-shop service embraces full management of the property until it changes hands. This ranges from making the building secure – including changing locks to deter squatters – the disposal of unwanted furniture and chattels, and house-cleaning after clearance. Auction House also will act as keyholder, providing lawful access for those who require it, read utility meters and maintain the gardens.
If executors decide to let the probate property for a while before selling it, the firm will undertake a carefully-researched valuation and suggest how the level of rental income might be increased, generally taking its fee from income generated. It also provides a full caretaker service with regular property inspections and, when required, will arrange maintenance work through a local team of dedicated and reliable contractors established over a period of many years.
- Nick Cragg is chairman of Auction House (West of England), part of the UK’s largest residential auctioneer in terms of lots sold and the fourth largest commercial property auctioneer. With more than 30 auction rooms across England, Wales and Scotland, the brand accounts for eight per cent of all property auction sales nationally. Auction House (West of England) – based in the Chipping Sodbury office of chartered surveyors Country Property – auctions rural properties throughout Gloucestershire, Wiltshire and Somerset as well as others in Bristol and Bath.
- To find out more about the Probate Property Service for Solicitors call Auction House on 01454 855060 or email Nick.email@example.com or contact Nick at Auction House (West of England); The Grange; 73 Broad Street; Chipping Sodbury; Bristol BS37 6AD