Lenders accused of shortchanging repossessed vendors
London-based auctioneer Edward Swindells of Swindells Auctioneer said the ‘rush to sell’ distressed or repossessed properties is often because insolvency experts and lenders have no incentive to achieve the best price for the vendor.
“Lenders should have a sense of duty to help both their vendor and business to business client achieve the best possible price and should be working more closely with the industry to secure this outcome.”
Lenders and IPs must bring the property to auction after consulting multiple auction houses to encourage competitive appraisals and more importantly competitive final bids, he said.
Insolvency Practitioner Julie Palmer, regional manager and partner South West for Begbies Traynor said it’s an odd assertion when lenders are already facing a shortfall from the repossession.
“We often delay deals to get a better price or work to improve the asset itself. It’s quite strange to load that responsibility onto the lender especially when there’s always a guide price,” she said.
“The message seems to be that IPs should be speaking to more than one auction house, but you tend to deal with the ones with a good track record. But like anything in life, a property is only worth what someone is prepared to pay for it,” she added.
UK Lenders operate under MCOB rules which state: A firm must ensure that it markets the property for sale as soon as possible; and ‘obtains the best price that might reasonably be paid, taking account of factors such as market conditions as well as the continuing increase in the amount owed by the customer.’