Lisa Isaacs explores what’s new in residential auctions, where the sector is heading and how estate agents are partnering with auctioneers.
Despite being one of the BBC’s biggest daytime shows - with 1.5 million regular viewers, Homes Under the Hammer doesn’t do much to change the perception of property auctions. The usual band of buy-to-let investors, cash buyers and opportunistic builders are shown snapping up run down wrecks, where as the truth is quite different – property auctions are becoming much more mainstream.
"The inclusion of conditional sales over the past eight years has opened auctions up to a new marketplace. As a result, the number of entrants and lots using conditional auctions is rapidly growing, I would estimate that in excess of 1,250 conditional residential lots will have been offered by the end of the first half of 2018.”
"In the room’ sales remain steady and online conditional is expanding rapidly,” says David. “Vendors are starting to say they want their lots sold online, although ‘in the room’ auctions will remain as long as buyers and sellers want them.” David also says that feedback suggests homemovers are using auctions as ‘chain breakers’ – selling or buying to keep transactions simple and as stress free as possible.
THE WHITE LABEL SERVICE
“The market is changing at a rapid pace and agents need as many ways as possible to service the needs of clients,” says IAM Sold’s Managing Director, Jamie Cooke. “If agents don’t adopt auctions as an offering within their business, they are at risk of being left behind. We’re developing a virtual auction offering, and we own, develop and operate all of our technology to keep us one step ahead.”
We experienced growth of 62 per cent last year and forecast a continuing increase in online auction properties. Justin Beckwith, Pattinson Auction.
Of the same mindset and also offering a white label auction service to agents is Pattinson Auction. “Due to increased uncertainty in the property market, both vendors and buyers are looking to discover more about auctions,” comments Auction Director, Justin Beckwith. “The typical buyer at an auction can now be anyone as there has been a shift in the type of property in the catalogue – it’s not uncommon to find a family home being offered, and people like the transparency and security an auction grants. We experienced growth of 62 per cent last year and forecast a continuing increase in online auction properties.”
LetsBid is a cross between Rightmove, eBay and an online auction, with pre-verified agents uploading properties to the LetsBid site. The platform uses technology to host a modern method of auction, while the agent controls the listing from start to finish.
Right from its launch the company set out to work with agents – not take business away from them – the service is free for the first 12 months and then it charges a monthly subscription fee rather than creaming off commission from each sale.
“We feel that there is no-one better at managing the buying and selling process than agents – we have simply provided them with the proptech to help them manage the auction stage,” comments LetsBid’s founder, Milton Rodosthenous.
LetsBid asks for a reservation fee to secure the property for 28 days.
Milton says opting in to this process now will make is easier for estate agents to adapt should reservation fees on all transactions be introduced, as favoured by the current Government, “Recent announcements from housing ministers are encouraging all agents to start using reservation fee agreements to protect both buyer and sellers, which is exactly the mechanism the modern method of auction uses. In my opinion, this will continue to help the auction market grow for years to come, as paying reservation fees will simply become the norm.”
Interestingly, the LetsBid business model is applicable to lettings as well – agents can upload a rental property and invite tenants to make bids online in the same way as buyers. Soon the platform will launch a new service enabling tenants to be pre-qualified by credit reference agency Lets Safe before they bid, to speed up the process for everyone involved and to provide letting agents with instant transparency – money and time saving perks much needed in the PRS.
THE PARTNER ‘IN THE ROOM’
Andrew also alludes to the certainty that auctions provide as a reason why agents should be embracing the gavel. In fact, every auction professional we contacted said the transparency and security offered by auctions was proving to be head-turning for both buyers and sellers. “Conditional auctions are seen as a way to avoid being gazumped or gazundered.”
DIVERSE, DETAILED & DIVULGED
Other properties, James says, perform better at auctions when sold in a clear manner and that’s where he sees the strength of auctions really coming in to their own. “I believe the recent growth in the auction market is due to the clarity of the auction process. Tighter regulation and governance means a great deal more auctioneers are publicising if there are known problems with properties or if there are any unusual conditions attached to the sale.”