US reposessions giant Real Estate Disposition Corporation has launched an online sale after selling half the lots offered at five high-octane auctions in the UK two weeks ago.
REDC, whose arrival in the UK generated huge media interest and controversy, is selling 190 repossessed homes on behalf of lenders via its Auctiontoday.co.uk website, after achieving an overall success rate of just 52% in the auction room. The online auction opened on 17 April and will close on Monday (27 April).
The five auctions of homes owned by lenders including Mortgage Express, Northern Rock, Clydesdale Bank and Merrill Lynch, raised £22m.REDC had initially claimed success rates of around 70%.
REDC chairman Robert Friedman said: “Overall, we have been pleased with the response from buyers, activity was lively and there was considerable interest. Our first foray into the UK market was a great success, now we intend to build upon that and broaden our appeal further.”
The California-based firm will return to the UK on 22 June for five more auctions.
Rival auctioneers claimed that prices in the room had been suppressed by REDC’s method of charging a 10% fee to buyers rather than charging vendors.
REDC’s practice of using historic valuations was also criticised for being potentially misleading to inexperienced buyers. But Keith Hollinrake, REDC’s UK vice-president, defended the practice, claiming that it indicated the property price at the height of the market, and that it had also used recent RICS valuations at times.
“The historic valuation indicates value and what might be reached in the future if prices spike again,” said Hollinrake. “We do not put in the previous valuation anticipating that people will come to an auction without doing their due diligence.”
REDC has allowed one purchaser who felt that she had been misled by the company’s valuation of a property to walk away from the deal.
First-time bidder Lichun Lu had bid £44,000, plus the 10% buyer’s fee and VAT, for a house in Halifax. REDC had published a previous valuation of £185,000.
However, Lu claimed that when she contacted a local estate agent to find out how much the property was worth she was told that it was “impossible” for it to have been valued at £185,000 and that it had failed to sell at £49,950. Lu then complained to the trading standards office.
Owner Mortgage Express has agreed to waive the acquisition. Hollinrake said the matter had been “resolved satisfactorily”.
