According to Allsop’s review of its auctions in 2014, non-domestic bidders accounted for a quarter of those in the room, on the phone or online.
The bulk came from Ireland, followed by western Europeans, west Asians, southern Europeans and Americans. Head auctioneer Gary Murphy is justly proud that last year his catalogue was looked at by one-and-a-half million people in 196 countries.
But what about the other way around? Are Brits flocking to auction houses across the globe, or going online to hunt down bargain properties on the block in far-flung foreign fields? And should they? Or do the potential perils outweigh the rewards?
“You have to look at why people from other countries want to buy here at auction,” says Savills’ Chris Coleman Smith. First, it is the fact that UK property has an international reputation as one of the best investments in the world. People are willing to invest, and trust the advice of professionals in this country, even sight-unseen. Second, it is because in the UK auctions are well-regulated and transparent. There is no real corruption and there are legal safeguards for buyers at auction.
Of course there are some places that share these qualities.
“We have offered lots in Ireland for four years,” says Allsop’s Gary Murphy. “And they are very popular.”
But there are still interesting differences. In Ireland the big difference is a disclosed a reserve price. Whereas in the UK, where the reserve is a closely guarded secret known only by the vendor and the man with the gavel, in Ireland the reserve price is published. “So that is where the bidding starts,” Murphy says. If the reserve is a million, the lowest bid is a million.
“In one way it is good because no one feels that it has been a waste of their time. But I find it odd, because you can’t start low to build up later. Instead you might have an entire room sitting in silence for a while until someone decides to start the bidding.”
Other nations have their own quirks.
In France the auction is conducted by candlelight (see box, below). In the Netherlands the bidding goes backwards, with the first and highest bid winning the lot. In South Africa, the US and Australia it is more common to have the auction on the front lawn of the property than in a hired room at a hotel. Australia and other countries also have auctions with two reserves, the first giving the vendor the option to sell and the second being mandatory.
In South Africa property auctions are far more common than in the UK. And while it is a fairly safe way to purchase property there are some notable, and potentially dangerous, differences.
ne of the most curious is that auction house staff and even the vendors are permitted to make bids to raise the price. As long as the practice is disclosed by the auctioneer before the sale, vendor bidding is deemed absolutely within the law, as was the judgment after the notorious Auction Alliance scandal two years ago.
For Coleman Smith, there is simply no good reason to start auctioning overseas.
“In the old days we sold properties in France. They were £30,000 barns for Brits to turn into holiday homes or for their retirement,” he says. “But now there just isn’t the appetite.”
So why not now? Are the prices to high to tempt the punters? Is there too little stock? Are the regulatory regimes too onerous?
Not really, says Coleman Smith. “We have a lot of associates across the globe, so it isn’t as though we don’t have the contacts. And on occasion we have offered stock. But that isn’t something we would do in the current climate.”
In other words, it’s the economy.
“Yes, there is a lot of stock to be had at very low prices in Spain and so on, but who is going to bust a gut to get it at auction? The reason there are such low prices is because there isn’t much appetite to buy it. An auction just wouldn’t make sense,” adds Coleman Smith.
But where the economic picture is improving and demand is returning to pre-crash levels, auctions are doing well. Both Savills and Allsop hold auctions in the Republic of Ireland. “They have picked up as the market has got better and better,” says Coleman-Smith. “There is greater appetite, so there are more bidders, better prices and so on.”
If the big boys aren’t interested in going further afield, how is the average British punter to find a way in?
It would appear there are, in fact, many companies offering an entry into international property auctions. There are numerous sites online, ranging from auction.com, a leading site for US real estate that both holds online auctions and acts as an auction listing service, to the considerably smaller bulgariadirect.com.
At the time of writing, 218 overseas properties were listed on eBay, over 50 of which were in France, another 50 in Bulgaria and over 40 in Spain. But look a little closer and the picture changes. Only 62 of those were actually live auctions and only six of them had attracted any bids.
Les Calvert runs the website Worldwide Property Auctions, along with a stable of others, from his home near Hartlepool.
While his portal is one of the most prominent overseas auction sites on the web, it is not what it at first seems.
Calvert started offering property at auction in Tenerife in 2007. They were physical auctions and he would go over once a month. “But it didn’t really take off. It was bad timing really, just before the recession really bit. So we moved it online.”
So spanishpropertyauctions.com was born, and that led to a host of others.
The problem then was that it was by no means easy for a Brit, whether an operator or a buyer, to enter the complex and opaque world of Spanish auctions. “In Spain prior to the crash it was difficult,” recalls Calvert. “If you were an outsider you couldn’t get in on the act.”
Some did give it a go, running auctions on the Costa Brava and Costa Del Sol, selling a place in the sun to British expats. “In the rest of Spain the organised bank auctions and so on were quite closed shops. A lot were auctions by notaries, where it was who you know, not what you know.”
Despite having the word “auction” in the titles, Calvert’s business is really a listing service. All “bids” are forwarded on to the seller, wherever they may be, and the latest top bid is shown on the site next to the details. Calvert takes a fee for each property listed. However, there is no time limit for when the bidding must end, and no obligation for the vendor to accept any offer.
“They aren’t really auctions,” says Calvert. “And most properties are left on for a long time. We’ve still got some Tenerife properties from when we first started. But sometimes you do get someone who just wants to sell in a hurry.”
For Calvert there are simply too many insurmountable problems with actual auctions anywhere other than in the UK. There is the fact that many seem to be closed shops. Then every country will have different laws and regulations, which can prove complex or even perilous to a foreign buyer. And, of course, things could get lost in translation.
The main stumbling block, he says, is that people, understandably, are cautious when it comes to buying a property. “They want to do a couple of trips, they want to think about it, discuss it with their family,” he says. “They can’t do that in the short time an auction offers, especially if it means flying off to Bulgaria.”
But the name remains. “The word auctions stirs something up in people,” he says. “It is the promise of a bargain.”
Are auctions English?
It is easy to presume that auctions are an ingrained part of every culture’s fabric and economy. But in fact auctions, especially property auctions, are rather rare. They are all but unheard of in Asia, illegal in parts of Africa and frowned upon in Latin America.
In one sense auctions are distinct to western Europe and those areas to which our cultural tentacles have stretched. They are part of our Roman heritage, along with straight roads and the phrase caveat emptor, and were used to sell off the spoils of war or the estates of traitors.
Even though, across the world, the term given to a standard, open ascending price auction is an “English auction”, in the UK the practice of putting lots under the hammer goes back only to the 17th century.
Auctions around the world: Italy
In Italy there is no shortage of stock going to auction, and to a certain type of Brit that Puglian farmhouse or dilapidated shack in the Tuscan hills might be a dream property and a snip even at twice the €50,000 guide price.
The prices may look great. However, Italian auctions are very different to those in the UK.
For a start, the auction process as we understand it – where an individual takes a property to an auctioneer voluntarily and is happy to sell it – is actually illegal in Italy. Instead, auctions are only for communes selling unwanted stock and for the forced sale of repossessed or distressed assets by banks, the tax office or Equitalia, or properties that have been seized by the courts.
What makes the whole thing rather peculiar is that, even in a forced sale, the seller is allowed to bid.
The auctions held at the tribunale are, otherwise, fairly straightforward affairs. Others are privately ordered court auctions that can become rather opaque.
They may appear to be absolute treasure troves, as each time the property doesn’t sell it is repurposed at a 10% discount, but they are fraught with legal loopholes.
Indeed, even once you have placed the winning bid and handed over the cash, the seller can always have the sale annulled by the court.
USA
It is the US that claims the crown as world’s auction king, with some $300bn of lots auctioned annually and real estate one of the fastest-growing sectors.
And, since the Revolutionary Wars, auctions in the US have continued the Roman association with the spoils of war.
Even now a vast amount of the property auctioned off in the US each year is sold by the United States Department of the Treasury, or through the courts.
The Treasury lists all of the properties it has coming to auction. Most of the property has been seized “due to smuggling, drug trafficking, money laundering, credit card fraud, food stamp fraud, mail fraud or other illegal activity”. The sales are completely open to overseas bidders with a valid photo ID, and the Treasury runs a number of online auctions.
France
The French, being a nation of incurable romantics, do auctions by candlelight.
Buying a property at auction in France is by no means common. In fact, it is slightly less common than in the UK. But while a British auction room may ring with the bang of the gavel, the French prefer the quite different atmosphere of a vente à la bougie, or sale by candle.
Sale by candlelight is an ancient tradition. In France the records of this practice are documented as far back as the Middle Ages.
At the opening of each lot a candle is lit. The bidding process is then much the same as in the UK, led by an auctioneer and continuing until no more bids are forthcoming – or until the candle goes out, whichever is sooner.
At that point a second candle, le dernier feu, is lit.
If no more bids are made before le dernier feu is extinguished – “eteint” – then the sale is complete and the highest bidder wins.
But if someone does bid while le dernier feu is burning, the whole bidding process starts again until the flame dies out.
The advantage for the buyer, and seller, is that the process, even with all that lighting of candles, is comparatively swift. Buying a house in France can take upwards of six months. Once a bid has been successful at a vente à la bougie the buyer has just 45 days to stump up the cash and can take possession as soon as funds have been transferred. In many cases, as when the state sells intestate estates, the whole deal can be concluded in a week.
On top of that there are, as in the UK, far fewer fees to pay.
