Property, as we all know, is a fast-moving industry and staying ahead of the game is an ongoing challenge. Fluctuations in the market and changes in consumer purchasing habits, mean that forward thinking estate agents are increasingly looking beyond tried and tested models, broadening their range of services to drive up sales and boost revenue. Those who stick to just one sales method almost inevitably find themselves losing out to their more agile competitors.
THE AUCTION ADVANTAGE
The difference between private treaty sales and auctions is a case in point. Whereas the former remains rigid, slow and can leave buyers vulnerable to being gazumped, particularly in areas where demand is high, auctions are proving to be a more transparent consumer friendly option, particularly when you take out sealed bids and best and final offers.
Buyers and vendors who are moving abroad, relocating to another part of the country or simply working to a tight schedule often want an alternative to private treaty sales, which can take 13 to 16 weeks to complete. More and more, they want the reassurance of a rapid, legally binding contract, which is why growing numbers of agents are receiving direct instructions to auction homes, rather than putting them on the open market first.
In other words, auctions are no longer a ‘last chance saloon’ for properties that have been lingering on the books for a long time; in the last six months alone, we’ve welcomed 50 per cent more members to our Auction Partners network, which supports agents looking to add auctions to their services – a sure sign that consumer demand exists.
While Private Treaty is rigid, slow and can leave buyers vulnerable, auctions are a more transparent consumer friendly option.
We launched SDL Auction Partners in the north-west in 2016 before rolling it out in other parts of the UK. Over the past 12 months, we’ve seen buyers snapping up everything from luxury apartments to sites with development opportunities, while private landlords have been quick to capitalise on the popularity of cities like Manchester – which have become a magnet for younger renters looking for an exciting yet more affordable life outside London.
THE CHANGING BALANCE
Interestingly, I think it would have been a different story if we’d chosen to launch the scheme in London first. Back then, demand for properties outstripped supply, so estate agents had little reason to offer anything other than private treaty sale.
Now London is catching up with the rest of the country and even though the housing bubble has certainly not burst, reports suggest that price growth is stalling. If this trend continues, vendors may be more inclined to sell at auction to ensure a swift transaction.
The same is true in the London lettings market, where supply is starting to outstrip demand. According to the ONS , rents in the capital dropped by 0.2 per cent in the year up to June, in contrast with other regions such as the East Midlands where they grew by 2.8 per cent and the South West, which stood at 2.1 per cent. In fact, London was the only region to report negative growth over the past year, and this could well prompt landlords to cut their losses and auction their properties, especially if they have substantial mortgages.
Accommodating variations in the housing market is one of the reasons why auctions have flourished in recent years. Although not always the right choice for first-time buyers, those who are buying or selling their second or third home, and have experience of the property market, are beginning to embrace them.
Not only does an auction reduce the chance of a buyer being gazumped, and the entire housing chain collapsing, the service also becoming accessible to more people. Investors may continue to dominate the live room – but online, you’re likely to see many more buyers looking for their next family home.
Ultimately, we have to empower estate agents with the right tools to deliver the kind of service customers now expect, rather than defaulting to private treaty sales every time. When tech-savvy millennials come to sell their first home over the next decade, they will choose property firms that offer choice and flexibility. As long as staff are fully trained and supported, there’s no reason why agents can’t market and sell properties at auction, and tap into a lucrative but sometimes overlooked revenue stream.