The Advertising Standards Authority (ASA) has not upheld a complaint about property auction guide prices.
According to a January 2018 MortgageStrategy.co.uk article, the complainant said that many properties sold for 25% more than the guide price, which made the guide price misleading.
The auctioneers who were the subject of the complaint, Cottons Chartered Surveyors, said that the catalogue contained a clear definition of how both guide and reserve prices were calculated. They claimed that they did their best to publish accurate price guides, but many factors were outside of their control when it came to the actual winning bids. These include competitive bidding and interested parties such as neighbouring property owners, and tenants occupying the property who were determined to win bids and prepared to offer well over the guide price.
Cottons submitted evidence about reserve and guide prices to the ASA, who ruled that the guide prices were not misleading and rejected the complaint.
Investors purchasing residential and commercial property at auctions need to carry out due diligence when deciding on their maximum bid. If they pay an excessive amount above the guide price, they could have problems obtaining a residential or commercial mortgage. The mortgage company will look at similar property in the area for valuation purposes, and may not offer the full mortgage amount needed for property they consider overpriced. Property sold at Cottons auction at 25% above the guide price would probably not be too far from the market price, so is likely to be eligible for a mortgage.
