Our view is that “movewithus” have little idea about markets, and saying that auctions are destabalising the housing market is as naive as saying short-sellers are destabalising the stock market. It’s also akin to saying that eBay is destabalising the market for … well almost everything! The original article is below.
Originally Published on Thursday, December 11, 2008 by http://www.themovechannel.com
Catherine Deshayes
Property auction sites are doing nothing to help the property market regain its footing, claims property specialist movewithus…
As transaction levels continue to slow, property auctions have grown in popularity as lenders increasingly believe that distressed selling is the only way to sell their repossessed properties.
movewithus Founding Director Robin King believes that undercutting the value of repossession properties benefits no one except the auctioneers themselves.
According to recent statistics from online auctioneer Allsop, 80 per cent of properties sold through their site were repossessions.
Robin King said, “Auction sites sell a high per centage of properties at significantly lower prices than they’re worth. Not only is this unnecessary – our statistics show that repossessed properties are continuing to sell as long as they’re accurately priced and proactively marketed – it also destabilises the housing market.
“Undercutting a repossession property’s true worth means both borrowers and lenders get less financial security and paints the false picture that homes will not sell unless they are underpriced.”
Mr King acknowledges that general house prices need to fall further to increase transaction levels but feels that the drastic cuts that lenders accept through auction sites are simply not necessary.
Mr King explained, “It’s true that the general market is still overpricing properties, which is stopping people from buying. Prices need to fall, but to realistic levels, not distressed levels.
“Through White Hot Property, our repossession and part-exchange property trading brand, we are selling close to 40 per cent of our properties each month – not by undercutting value, but by setting realistic prices based on independent valuations and implementing proactive sales strategies,” he added.
Source: movewithus
And in repsonse…
Gary Murphy, Partner and Auctioneer for Allsop said, “I recently noticed commentary from Movewithus, who suggest that auction sales are “undercutting values”
“Auction prices are not undercutting values. They ARE values. That’s why lenders are happy to use auction to sell repossessions.
“If lenders did not achieve value, they would be in breach of their duty to their borrowers. An early sale stems further losses incurred through accrued interest payments and potentially falling house prices.
“Technically the borrower remains liable for those losses.
“Importantly, auctions enable empty homes to be reintroduced to the market and made available for occupation as quickly as possible.
“Owner occupiers, and first time buyers in particular, now have the benefit of choice and affordability.
“The sooner we accept that prices are falling, the sooner we’ll reach stability in the housing market and recovery will follow.
“If we continue to deny the inevitable, the pain will be prolonged and potentially more harmful to those affected,” he added.
Let us know your views
Do you think auctions are necessary? Let us know on catherine@themovechannel.com.
