Selling your properties at auctions: An interview with Knight Frank
http://propertysoul.com/2014/07/28/s...-knight-frank/
Selling your properties at auctions: An interview with Knight Frank
July 28, 2014
Date: July 5, 2014
Venue: YMCA@One Orchard
Interviewee: Sharon Lee, Director & Head, Auction, Knight Frank
Sharon Lee is armed with a valuation licence and more than 20 years of experience in the Singapore property market. Headed by Lee, properties sold by the Knight Frank auction team range from residential, commercial and industrial properties to development sites. Knight Frank auctions an average of 180 properties a year, grossing a total of more than $50 million. Their major clients include banks, financial institutions, government and statutory boards, liquidators, public companies, trustees and individuals.
Q. Compared with traditional listings, what are the advantages for property owners to sell their properties at auctions?
A. For properties with the urgency to sell, an auction provides a faster and more effective selling platform. It can attract wider attention from more buyers. It also offers three opportunities to sell – before, during and after auction.
One big advantage of an auction is that properties are sold through open and transparent bidding. It cuts out any lengthy negotiation with the successful bidder signing the contract on the spot.
Since there is no price ceiling, depending on the attractiveness of the property, the intensity of bidding and the skills of the auctioneer, selling your property in an auction may potentially achieve a selling price higher than your reserve price.
Q. What is the ‘ideal’ type of properties to sell at auctions?
A. Generally, properties with development potential or prime landed/private residential properties in good locations will attract more interest. Other types of properties suitable for auction include unique and rare properties, e.g. conserved bungalows; absentee owners or multiple owners, e.g. collective sale; and trustee/liquidator/estate sale.
Q. Could you share with us a case you handled before? What were the challenges and how did you overcome them?
A. When we helped a developer to auction a brand new freehold penthouse at Paterson Linc, we knew that it wouldn’t be easy. In the first place, it’s generally more difficult to sell a penthouse.
Besides, the 1,958 sq ft two-level penthouse came with a not-so-attractive layout – a ledge in the middle of the living room; a roof terrace on the second level; and a master bedroom too small to fit in a king-size bed. Nonetheless, with our aggressive marketing, it was finally sold at $3.442 million after two rounds of auction.
Q. What are the useful tips that you can share with owners who want to sell at auction?
A. Sellers must be realistic about setting their reserve price. After all, buyers can easily check recent transactions online.
Also make sure that your property is in tip-top condition before the open house for interested buyers. Have air conditioners, curtains and furnishing in the property rather than showing a bare unit.
Q. What are the changes in the history of the property auction industry in Singapore? How has the market evolved in the last decade?
A. In the past, people were skeptical of auctions and preferred the traditional way to buy or sell properties. The auction was synonymous with mortgagee sale or bargain for sale. Back then we could only rely on e-mail and fax to market our list of auction properties. The limited marketing means confined the reach to potential buyers.
Since then auctions have become a popular platform for property sales thanks to the advancement of technologies in advertising and social media. Now we can be very innovative in marketing. We can send the list of auction properties by SMS, whatsapp and eDM with a database larger than that of any individual agent. We can put up an open house on Facebook, YouTube and PropertyGuru for instance. We can also arrange exclusive presentations to VIP clients and interdepartmental referrals within Knight Frank.
Our extensive network and media coverage help to maximise the exposure of our clients’ properties. That’s why you can see a long list of owner’s sale properties in our auctions these days.
Q. The number of mortgagee sales at property auctions in the first quarter has surged compared with last year. Do you see that as an important sign for the slowdown of the property market?
A. For Knight Frank, the total number of properties put up for auction has risen by 12.1 percent year-on-year. Majority of them are residential properties, followed by industrial properties and shops or shophouses.
The data shows an upward trend of landed properties being put up for auction. Their relatively higher value has made it increasingly difficult for landed homeowners to service their mortgage payments, especially after the introduction of the Total Debt Servicing Ratio (TDSR) framework.
In fact, the number of mortgagee sales has increased 33 percent in the first half of this year. The volume of properties successfully sold under auction has also increased 66.7 percent year-on-year in Q2 2014.
In particular, the higher success rate of properties sold under owner’s sale implies that owners are now more realistic in their asking prices to meet the reduced budget of potential buyers.
Q. Lastly, how do you see the future of the property auction market for the rest of the year?
A. Under the property cooling measures and the TDSR framework, more properties are expected to be put up for auction for mortgagee sale in 2H2014.
In view of a prevailing buyers’ market, genuine sellers keen to dispose their properties should adopt a more realistic pricing strategy as potential buyers waiting on the sidelines are anticipating more price moderations.
