The Coronavirus pandemic could lead to a rise in online auctions as people turn to safer ways to buy and sell property. In-room auctions have become an increasingly popular way to sell, but online auctions have also seen growing demand.
With the UK government urging people to avoid all non-essential contact – and over-70s set to be isolated – anyone thinking of taking the auction route could decide online is best.
That’s certainly the view of Charlie Lancaster, Managing Director of Mybid4it. com, who believes that might be a logical step for both buyers and sellers.
“Other than getting out to view the property, you are not going to have to stand in a packed room full of people, you are just going to be at home on your computer, or on your phone,” he says.
It’s too early to tell if the market will be affected. Good properties are always going to sell – as long as they are attractive – and certainly the ones that go to online auction that are correctly priced. Charlie Lancaster, Mybid4it.
“That’s one of the beauties of online auctions – you can access the auction from wherever you are in the world or you can be sitting at home safe and sound. People are becoming more reluctant to be out of the house. The online auction takes away any concerns that may have.”
It’s a view shared by Justin Beckwith, Director of Pattinson Auction, who says he is already considering putting its in-room auctions online. “The one good thing is that our online auction platform means people can buy and sell property from the comfort of their own home – that’s proving even more popular than it is normally.
It’s a perfect solution for anyone still looking to make that move. “We’re already putting measures in place so that staff can still work and we can make sure transactions are going through.”
The good thing for the buyer is that it gives commitment to the seller and by paying that money it means that nobody can come in and sweep the sale from underneath them. Justin Beckwith, Pattinson Auction.
Both Beckwith and Lancaster say they had a strong start to the year, with a big increase in the number of online sales.
“New referrals have been fairly consistent on a weekly basis since the start of the year – we’ve had a lot more instructions than at the same time last year,” says Beckwith.
While Lancaster adds, “The last few months have been quite positive, in terms of prices uplifting, with confidence returning to the market – that’s why I think it’s too early to tell at this stage if the market will be affected, transactionally.
“But I think the right properties are always going to sell as long as they are attractive and certainly the ones that go to online auction that are priced correctly, we are still seeing demand for.”
In contrast, Suzanne Randell, operations and Marketing Director for Bond Wolfe, Birmingham, believes that many people prefer in-room auction and will continue to attend as long as government restrictions allow.
The company deals with a wide range of property, from commercial to residential – and is the appointed auctioneer for Birmingham City Council and West Midlands Police, among others.
There’s no point trying to second guess, nobody knows what the situation will be – we are all set up to work from home; we will just try to keep things as normal as possible. Suzanne Randell, Bond Wolfe.
“It’s very much business as usual until we are told otherwise,” she says. “Online auctions have been around for a few years and it’s something we can do, but a lot of our vendors prefer the traditional in-room auctions because they get better prices with in-room situations. It’s an option that’s there but I’m sure some vendors will be waiting for the normal in-room auctions to start again.
“We were holding fantastic auction sales last year and we’ve seen a trend throughout the whole year of our auctions continuing to grow – our February auction was the largest ever held in the Midlands and the largest outside London. We were certainly noticing a trend in the number of lots coming to auction, and our success rate as well.
“Online is a possibility,” she adds. “A lot of the main auction players can do online auctions but a lot of it comes down to personal preference. We will just monitor the situation and adapt as we go along.”
Popular online format
Beckwith says online is an increasingly popular format, and that potential buyers are no longer put off by the fear of the unknown or having to complete on the sale within a strict deadline.
“The good thing for the buyer is it gives commitment to the seller and by paying that money nobody can come in and sweep the sale from underneath them.”
He says Pattinson, which won the Gold Award for Residential Auction House of the Year in The Negotiator 2016 awards, gives a 15-minute window at the end of every auction where there is a timeframe when no further bids can be placed.
Furthermore, bespoke completion dates can often be agreed up front with a seller before a bid is placed, with deadlines typically ranging from 28 days to three months – the average is 48 days. B
eckwith doesn’t think buyers are put off online auctions because they sometimes have to pay the fee – the seller can opt to make it the buyer’s responsibility.
“I think the net result would be the same,” he says. “If the vendor wants £100,000 for a property and they are going to pay a fee of £5,000 they can say they want the buyer to pay the fee, but the buyer can offer £95,000.
“We don’t get any pushback from buyers or sellers, to be honest.”
All three auction companies we spoke to supply a full legal pack before the auction starts that can be studied online, usually including local authority searches and other key legal documents.
Randell says Bond Wolfe has seen an increasing number of people coming to the auction room who haven’t purchased before and buyers seem comfortable with the standard 28-day completion period.
“We have plenty of advice on the website and in our buying guide and we have posters up in each of the auction properties for the viewings, making sure that people are informed and that they know what they are doing,” she says.
“We don’t necessarily know in advance what will be prepared. As soon as it arrives we upload it to our website so people can view it at their leisure. We encourage vendors to supply all the documentation including searches, which they do the majority of the time.
“We advise them if they are not sure what they are looking for to get a solicitor to log on and take a look on their behalf so they can take advice ahead of the auction.”
Team of experts
She says the company has a team of dedicated experts who deal with residential, commercial and development sites. “It puts us in a quite unique position to be able to give advice on properties across the board.”
Lancaster at mybid4it.com says transparency is key in the online auction process. The auction pack, including searches, is prepared up front, and the company does not ask buyers for a deposit. There is also a standard 42-day completion period, which doesn’t start until the buyer’s solicitor receives the legal paperwork.
“Having the contract pack put together up front is a real benefit for the whole process – there isn’t a lot of work to be done because the contract pack is prepared and ready to go out.”
He says unforeseen legal delays occur rarely, but when they do they can usually be resolved amicably.
“We’ve had a couple of transactions that have gone over the deadline – we very much leave it to the vendor to decide on that.
“It can happen, because you’ve not got complete control; it’s down to the people involved in the transaction agreeing an extension.”
Like both the other auction houses, Mybid4it.com had a good start to the year – but what lies around the corner, in terms of the fallout from Coronavirus?
“The last few months have been quite positive, in terms of prices uplifting and confidence returning to the market – that’s why I think it’s too early to tell at this stage if the market will be affected transactionally,” he says.
“But I think the right properties are always going to sell as long as they are attractive and certainly the ones that go to online auction that are priced correctly, we are still seeing demand for them.”
He says there may inevitably be a slowdown as more people self-isolate, and observes that the next few weeks will be “quite testing”, though he has yet to see any effect on new instructions.
“It’s going to have an impact on all businesses – it’s unknown. We’re remaining positive – the last few months have been strong.
“I think that’s just down to buyer confidence. A lot of people will employ wait-and-see tactics. I think the right properties at the right prices will always sell.”
With typical British stoicism, Randell adds, “There’s no point trying to second guess, nobody knows what the situation will be – we are all set up to work from home; we will just try to keep things as normal as possible.”
Mybid4it.com: fees 2.5% (£4,000 minimum inc VAT).
Pattinson: fees range from 3.75% to 5%.
Bond Wolfe: fees £950 + VAT.