Is Selling at Auction the Best Route to Maximising Prices in the Current Market?
During the past year we have managed a growing number of land and property sales with prices realised of upwards of over 40% over the asking price. The key to this success has been selling at auction, a route to maximising values that we believe should attract more vendors to the sound of the auctioneer’s gavel.
In recent years we have been given the responsibility for selling several farms and parcels of land both by auction and by private treaty and it is the property we have brought to the market at public auction that have broken new ground and set new milestones in record land prices.
These auctions have demonstrated how sales are being driven by a widespread belief that the future is farming at scale, and by location, with many land and farm sales knocked down to neighbouring farmers and farming enterprises, and especially those with the next generation waiting in the wings.
That includes the two properties we sold last year at our Borderway Mart: an 82.8 acre stock farm near Brampton with a three bedroom traditional farmhouse and a range of outbuildings which sold as a whole for 43% over the asking price; and a 253.60 acre stock farm near Wigton, with a four bedroom farm house and adjoining outbuildings, which sold in eight lots for a total of 53% more than the asking price.
The critical factor in achieving this remarkable level of success has been the expertise of the agents and auctioneers in choosing the right route for the right type of property, and manging the sale to the best advantage of the vendor.
Selling by auction is a very traditional method of sale, and some vendors prefer the sale to be private treaty and the results kept private. However, in this digital age the details will not remain private for very long, with land registry putting all information into the public domain and we increasingly find that by private treaty is not necessarily going to achieve the best prices.
When I am asked to advise on a land or farm sale, I believe that it is key that it is appraised by an agent with local knowledge and someone who can evaluate the different marketing options and for me the absolutely fundamental differential is location. Here at H&H Land & Estates, we are achieving the highest auction prices with farms and land located in areas of high demand, where neighbouring and nearby farmers want to increase their acreage and invest in land adjacent to their current property.
The type of property is not as relevant as the location, we have sold everything at auction from a single acre to a £3million ring fenced farm and everything in between, but there is no doubt that the biggest demand is for bare parcels of land, and this demand is increasingly competitive in the current market. And our recent sale of 77-acres of land at Temple Sowerby near Penrith, proved the demand for the right location very clearly. All 5 lots sold to local farmers within the area who wanted to extend their existing farming enterprises. Determined bidding pushed the guide price of £978,000 to a final total of £1.46 million – a phenomenal 49% over the asking price.
When it comes to the sale of a major asset like land, more traditional vendors may be nervous of taking the auction route, but we are fortunate to have our H&H heritage which of course offers a unique track record in agricultural auctioneering and specialist local knowledge to reassure vendors when this is the right approach.
When selling by private treaty, the process can be long and complicated, and in some cases may not result in a successful completion especially in these current times of higher interest rates. For vendors this is not the case when selling their land or farm by Public Auction. The auction process is totally transparent, it is a process which is smooth, simple and decisive. The vendor knows the asking price and the reserve and the buyer must prove, before the sale, they have the financial resources. So it avoids lengthy negotiations, as when the gavel comes down there is a binding contract in place which virtually eliminates the risk of the sale not progressing forward.
For vendors in the North of England, the reputation of Harrison & Hetherington is an added reassurance of auction sale success as it has a history deeply rooted in selling by public auction. Many farming business vendors have equally deep roots in the auction ring, so they understand the advantages of competitive bidding and our ability to attract the widest range of serious, proven buyers to their sale.
As an agent of course we will always defer to a vendor’s preference for a sale by private treaty or at auction, but as we head into 2024, for the right parcel of land or farm, in the right location, we are completely confident that we can achieve the very best value for the vendor in the sale ring.