Phil Spencer: Time for agents to grab the gavel as ma...

The market’s likely to slow this year as the rising cost of living saps some buyer confidence, so agents are understandably keen to optimise their competitive advantage.

One trend I’ve noticed has been a growing interest - from consumers as well as agents - in online auctions as a means of selling homes. They’re on offer from several different auction houses, almost all seeking partnerships with agents.

Three advantages of offering auctions

As I see it, the advantages to agents of going down this route are three-fold. The first is that an auction is becoming increasingly attractive to younger buyers and sellers.

One online auction house reported a remarkable 440 per cent rise in the number of potential purchasers aged up to 24 who have logged on to an auction in the past two years. And there was a 42 per cent rise in the number of 25 to 34 year olds, too.

This is driven, of course, by working from home but nonetheless it’s a sign that younger internet-savvy people are increasingly recognising auctions as a legitimate sales route. We have certainly seen this through my Move iQ website where we connect sellers to an online auction platform.

The second advantage is that the option of an auction may be increasingly appealing to sellers in the next year or more, and they may be thankful for you giving them the choice.

Traditional private treaty sales have, in many cases, been pretty quick to go under offer in the past 18 months: you don’t need me to tell you that the stamp duty holiday and the pandemic-induced ‘race for space’ have led to a frenzy and, often, some sales without properties even undergoing any marketing.

However, that may change in 2022 with buyers sitting on their hands to see what happens in the wider economy - for a vendor with a time-sensitive sale, the much greater speed and strong likelihood of finding a buyer of auction can be a saviour.

The third advantage, and the most obvious, is that online auctions offer another revenue stream for agents. If private treaty sales drop, then auctions open new possibilities.

The importance of transparency

Although changing not everyone has yet embraced the online auction, this is largely due to lack of understanding and knowledge of how they work which creates suspicion that they load the costs onto the buyer rather than seller.

There has been criticism that explanations of the Reservation Fee (or Premium) in particular have been less-than-transparent and have caught some purchasers by surprise.

In the early days of online auctions, those critics might have had a point - but not today.

Reputable auction companies and agents make the buyer’s liability clear up-front and again on multiple occasions throughout the transaction process - and this makes sure that the buyer factors in the fee when making a bid.

There have been remarkably few complaints about online auctions to consumer bodies including The Property Ombudsman, and long-standing agents and portals - with trusted reputations built up through hard work - now routinely link with online auction houses.

On the other side of the cost chain, there is of course a huge ‘plus’ for vendors. This is a ‘no sale no fee’ route, on top of the other advantages of their being realistic fixed timescales and a track record of very few fall-throughs compared to mainstream sales.

Marketing is key

For an agent, marketing an auction is key - and I’d recommend that auctions be a major element of your ‘offer’ to potential clients, not a ‘last alternative’ if other sales routes fail.

The old perceptions of auctions being for ‘difficult’ properties, or being suitable only for developers or landlords, are now old hat. You only have to look at auction inventories to see a wide range of properties of all kinds and at all price points.

And with a 56 day window between the hammer going down and the sale being completed, the potential exists for buyers to secure mortgages. This means the auction is no longer the preserve of cash buyers only.

The more these points are emphasised in agency marketing, the more the online auction becomes a legitimate and respected option for sellers.

If you’re still unclear, listen to our podcast with GoTo Auctions - it shows how this route is now increasingly taken by the consumer. Can your agency really afford not to offer it as a choice?

*Phil Spencer is a presenter, author, businessman and property investor. Phil’s consumer advice platform Move iQ, is a website, YouTube channel and podcast. Each preserve and reflect the same impartiality that consumers trust and base their property moving plans. Phil’s Move iQ Pro, is coming in 2022! It will connect select property professionals with Move iQ’s consumer audience. If you’re interested in hearing more subscribe here.

Stuart Collar-Brown
30 March 2022 09:18 AM

I'd agree Chris that the general perception of auctions is people looking for a "bargain" but then again, no property can be sold without achieving the seller's minimum price which they choose and you also can't control what the next person is willing to pay so the market dictates the sale price - not the auctioneer or the estate agent. In terms of maximising the asking price - this is solely dependent on what is being sold......an £800,000 auction lot just sold for £5.4m at auction so it's safe to say if that was sold via the normal private treaty route, it may not have achieved that figure.

Stuart Collar-Brown
30 March 2022 09:32 AM

I agree with the point that if an auction lot doesn't sell, there is a black mark against it Trevor - this is a huge problem in my opinion with the 0% commission model many of the online auction platforms offer because agents are incentivised by the auction houses to put as many properties to auction as possible - even if they aren't suitable with no thought for the seller's ongoing ability to sell so this is a real problem in our industry.

In terms of finance, I've only had 2 people out of 3,000+ lots that have failed to get finance on an auction lot so this is a bit of misconception of auctions - buyers just need to be organised prior to bidding and have at the very least an AIP in place and they can purchase with normal High Street lending - also, if they ever need more time to complete, they just need to ask the auctioneer as most sellers only care about the exchange of contracts and can often wait 2-3 months for the completion to give the buyers more time.

Last point on auctions working in a active market but not a slow one, I've worked in auctions for the past 15 years so have experienced highs and lows in the property market and from my own personal experience auctions have been fairly consistent throughout - many of our buyers are professional property buyers so this is how they make their living - either doing up houses/flats to rent or sell and developing/building new properties for end users - this is further backed up by the average sold rate for auctions across the UK over the past 10-15 years rarely dropping below 75% so it's like any property, if its priced correctly, it should sell regardless of the market conditions