Since August this year, John Pye Auctions has sold more than 29,000 televisions, 24,000 cars, 16,000 ovens, 15,000 watches and 1,900 iPads. More than 275,000 people are registered to bid in its sales, which moved entirely online five years ago. The family-owned firm will celebrate its 50th anniversary next year.
John Pye’s relatively new property auction business has sold more than 100 lots online over the same three month period since August. Head of property Richard Reed, who launched the property auction business in 2013, says the division is well on track to exceed its previous annual total of £70m from 442 properties. It has already raised more than £50m since August.
Importantly, he says the business is moving up a level in terms of the stock it is handling. He points to recent instructions to sell eight bank buildings with a total guide price of £20m, all of which will go into its 15-16 November sale.
Seven of the banks are Halifax branches to be sold on behalf of LPA Receivers. The bank branches themselves are unaffected and remain open for business. The eighth bank is a Barclays branch, which is also being sold on behalf of LPA Receivers.
“This is us moving up the stock ladder,” says Reed, whose client base is made up of LPA receivers, insolvency practitioners, banks, property companies and private investors.
He is increasing the frequency of John Pye’s property auctions to meet client demand. They are now held every three to four weeks, having begun as quarterly sales and increased to monthly last year. To help with the expansion, Reed says he is currently recruiting for two chartered surveyors.
The business has also recently opened a Manchester office, working in partnership with Manchester property entrepreneurs Atif Malik and Ayyaz Ahmad. This adds to its regional hubs based at John Pye’s headquarters at the former Star Brewery building in Nottingham and its London office on Old Bond Street, W1.
“We are selling more property in the North West than ever before,” Reed says. In February, it made headlines with the sale of the Trafford Park Hotel in Manchester on behalf of fixed charge receivers for £900,000. It was guided at £400,000.
John Pye’s property auction model hinges on a 0% seller’s fee. “There were already enough hurdles to overcome to break into a saturated market [without charging a seller’s fee],” Reed explains. “So we just charge a buyer’s premium of 2% plus VAT (with a minimum fee of £2,500 plus VAT). If we don’t sell a property, we don’t get paid,” he says. “It’s working, we are a profitable business.”
The auctions are “traditional” in the sense that sales are unconditional. Successful bidders have 20 working days to complete. “It’s a very scale-able model,” he adds.
Reed argues that each two-day property sale is as intense and exciting as a ballroom auction. He closely manages a team of 12 staff during the sales to ensure the best price is achieved for each property. That includes “hitting the phones” to encourage interested parties to keep bidding.
The highly sought–after bank investments set to go under the hammer next month are likely to attract yet more private investors to try John Pye’s online model. And if they don’t succeed, there’s always a watch or iPad to go after in consolation.
Bank branches
Guide prices for the high street bank branches range from £1m to £4.5m, reflecting gross initial yields ranging from 5.5% to 9.7%.
The first seven properties let to Halifax have approximately five years remaining on the leases.
Simon Hunt, director in real estate workout at JLL, is LPA receiver on the portfiolio and says he expects John Pye’s extensive database of active buyers and its global reach to generate a large amount of interest in the blue chip investment opportunities.
The eighth property, let to Barclays, has 10 years remaining.
History: John Pye & Sons
- 1968 – founded by John and Ann Pye in Nottingham, managing instructions for probate house clearances, cessation of business asset disposals and private chattels.
- 1990s – expanded throughout the East Midlands to encompass insolvency practitioners and industrial machinery valuations and auctions.
- 2003 – began to engage with retail PLCs to provide a pipeline of more everyday auction stock such as electronics, and home and garden stock.
- 2008 – began holding online auctions for insolvency stock
- 2013 – launched John Pye Property, in response to market requests for bolt-on property services for insolvency practitioners.
