A year on from last year’s Covid lockdown, auctions are entirely online. Some believe they are so successful that ballroom auctions may never return. In early March 2020, Paul Fosh Auctions had a typical ‘ballroom’ property auction planned, with 87 lots set to go under the hammer. There would be roughly 300 people in the room, with typically only about half of them bidding. Then lockdown hit, and everything had to be switched online at the last minute. Fast forward 12 months and an online auction is about to take place over a 48-hour window – with more than 1,400 bidders registered to take part.
“That is for me evidence enough that if you want to do right for your sellers, why would you ever go back to the room?” says company founder Paul Fosh. “We all love performing on the rostrum but I have to accept that time has gone.” He relates an imaginary conversation in ten years’ time with a future granddaughter.
“‘So Grandad what did you do?’
‘I used to drive to a hotel in Cardiff and stand on a wooden box and people would drive from all over the country and crowd into a hot, smelly room, and I would ask them to make a bid and they would wave a catalogue in the air.’
‘But Grandad, why didn’t they just bid online?’”
Fosh believes some auctioneers are just “burying their heads in the sand waiting for room sales to come back again” – something he believes is never likely to happen.
Who benefits from traditional auctions? I would argue that only the auctioneers do – I would argue the seller gets no benefit from a property being sold in a room.” Paul Fosh, Paul Fosh Auctions.
“Who gets to benefit from traditional auctions? I would argue that only the auctioneers themselves do – I would argue the seller gets no benefit from a property being sold in a room.”
He draws a parallel with the collapse in retail. “It was going to happen, Covid has just accelerated it – what might have taken ten years has taken one year, and I don’t know if there will be an appetite from many members of the public to go and stand in a crowded room for some time to come.”
Fosh says virtual tours have helped to transform property auctions over the past year, with physical viewings cut to a minimum. “Virtual tours are now here to stay.”
Paul Thompson, Managing Director of Pugh Auctions, disagrees that traditional ballroom auctions are dead and buried, but does see a big increase in properties sold at auction.
“I wouldn’t go so far as to say the auction room is dead,” he says.
You tend to find over time that these positions recover. Room auctions will play a part in future, but perhaps run in parallel with people being able to bid online.” Paul Thompson, Pugh Auctions.
“You tend to find over time that these positions recover. The chances are room auctions will play a part in future, but perhaps run in parallel with people being able to bid online.” He points out that auctions are getting ever increasing exposure in the mainstream media and that more and more people see it as a perfectly valid way of buying and selling property.
“I’m sure the pandemic, by pushing more people to auctions, will have kicked it on and raised awareness,” he adds. Thompson had to switch a ballroom auction online at the last minute at the start of the pandemic, and while there was an initial impact on the business in terms of property flow, the firm has seen a dramatic recovery over the past year.
“The market was probably 60 per cent down in May and June but we have seen consistent recovery month on month to where we are now,” he adds. “We are pretty much back to where we were before.”
SDL Property Auctions
A year ago in March, SDL Property Auctions was set to stage its 100th sale in Derby. At the last minute, as lockdown was announced, celebrations were cancelled and the event was held behind closed doors. “We had decision to make on Tuesday morning as to what to do,” says Managing Director, Andrew Parker. “We decided to carry on as normal and have an auction behind closed doors, and get everyone registered for a phone or internet bid.”
While the technology is wonderful and has got better, at the end of the day it’s an emotional transaction – quite often if it’s going to be a home for someone.” Andrew Parker, Managing Director, SDL Property Auctions.
Somewhat to his surprise, the auction was a huge success, and the firm hasn’t looked back. However, as well as using a listing-style format for some auctions, SDL Property Auctions also holds regular virtual auctions with an auctioneer at the rostrum. “Some customers still see some value in an auctioneer,” says Parker. “I would agree, and not just as a turkey not wanting to vote for Christmas. While the technology is wonderful and has got better, at the end of the day it’s an emotional transaction – quite often if it’s going to be a home for someone.”
And it’s not just sentimentality; he believes there are solid business reasons for room sales, too. “The computer won’t decide if the bidder on screen is taking longer to respond than others, but an auctioneer would,” he explains.
“I might notice that a buyer hovers for ages before making a bid. If I were simply counting to 20 and electronically dropping a gavel, I can thinks of lots of occasions where we might have missed another bid, and quite often then ends up not just being one more bid but at least a couple more.”
However, when Covid restrictions are lifted, Parker says it’s unlikely SDL Property Auctions will return to ‘physical’ auctions. “I don’t think we’ll go back to a room, my intention is to continue what we are doing,” he explains. “We used to do 30 auctions and we’ve got no intention of going back to that. What this has done is accelerate what was already happening – 20 per cent of bids were already from the internet; this has normalised and accelerated that process.”
However, recognising there are social and networking elements to traditional auctions, Parker says SDL Property Auctions may hold a couple of events a year that are “more than an auction”, perhaps along the lines of a property investors’ event.
And the future for auction? “I can certainly see two per cent becoming seven to eight per cent in the next five years,” he predicts.
Of course, the pandemic has seen online auction companies go from strength to strength, taking an ever-increasing share. Jamie Cooke, Managing Director of Iamsold – which, while holding traditional auctions, has pioneered the online model – believes Covid has had a transformational effect on the property market.
Since the beginning of the pandemic, the market has seen a rise in non-discretionary sellers and people needing to move quickly as a result of lifestyle changes.” Jamie Cooke, Managing Director, Iamsold.
“COVID-19 has fast-forwarded change in the industry by as much as a decade in my opinion, and I think that the industry will be permanently changed,” he says. “Long before Covid, in-room auctions were in decline, and the pandemic may have hastened that decline. I don’t think the ‘ballroom’ will come back in the same way.”
Auction sales at Iamsold increased by a record-breaking 18 per cent during 2020 on the previous year, with 3,770 UK properties sold, and Cooke sees no signs of that slowing. “We’re breaking records each month. Since the beginning of the pandemic, the market has seen a rise in non-discretionary sellers and people needing to move quickly as a result of lifestyle changes or wanting to be closer to family, for example, which the Modern Method of Auction (MMoA) has been well placed to support.
“Awareness of auctions as being another method of sale available to vendors is growing… and perceptions are positively changing.
“We know that non-discretionary sales currently make up about a third of the market,” he explains. “These are vendors who need to sell versus just wanting to, so speed and security are paramount, and as market awareness of MMoA and auction increases, they will more actively choose this method of disposal.
“The future of auction is online and we’ve pioneered MMoA as the modern and convenient way to buy and sell property. And what of recent criticism of the MMoA – the large fees charged to buyers, and the fears it may deter some from using the method.
“Criticism in the main speaks to the underlying lack of understanding of the method and the processes involved,” says Cooke. “MMoA has many benefits for buyers and sellers when it’s the right method of sale for their circumstances – mainly speed and security – but it is fundamental that they have full visibility and transparency all the way through the process.”
Another traditional auction house, Pattinson, has seen business grow by a staggering 53 per cent over the past year. “Business has been very good. December was an absolute outstanding month or us – we probably sold more houses in December than ever before,” says Auction Director Justin Beckwith. “Auctions are becoming more and more popular every month. It’s just a question of continually educating buyers and sellers, and if we keep doing that we should continue to see consistent growth.”
Auctions are becoming more popular. It’s just a question of continually educating buyers and sellers, and if we keep doing that we should continue to see consistent growth.” Justin Beckwith, Auction Director, Pattinson Auction.
Covid restrictions have seen a dramatic growth in the use of video tours, and all properties going on a Pattinson online auction must have one, so initial viewings, at least, can be done virtually. However, Beckwith says the firm does plan to return to traditional room auctions when circumstances allow, alongside virtual auctions – which were already being used for some events pre-Covid. Like the others we spoke to, he believes the pandemic’s effect on the property market means demand for auctions is likely to be much higher in the future.
Other beneficiaries of the pandemic have been proptech firms – particularly those offering back-end solutions allowing agents to run property auctions via their websites.
According to Robin Rathore, founder of Bamboo, the first lockdown increased the take-up of tech across the board, and online auctions have been one of the main beneficiaries.
The online auction sector was growing anyway before, and lockdown was the catalyst. I don’t think it’s going to go back to the old way; online auctions are here to stay.” Robin Rathore, Founder, Bamboo.
“What agents have realised as a result of lockdown is that there are other ways of transacting that have the same, if not better results,” he says. “The online auction sector was growing anyway before, and lockdown was the catalyst. I don’t think it’s going to go back to the old way of doing things – I think online auctions are here to stay.” He believes the past year has highlighted the benefit of the online auction both to those who would normally take part in a ballroom auction and traditional auctioneers.
“If you were a traditional auction buyer or seller, there are some real conveniences and benefits to doing it online now,” he adds. “I don’t think online auctions will replace traditional ballroom auctions but it will increase the entire sector as a whole.”
Bamboo’s growth over the past year has been breathtaking. “From what I can see the online auction sector has grown five-fold in the past 12 months; Bamboo has grown ten times – not just in terms of the number of sales but in terms of buyer registrations, user registrations and website activity,” says Rathore.
Bamboo is white-label technology, allowing agents to run either eBay-style or event auctions with their own branding. “Control is the key USP – with our technology, customers have greater control over their vendor relationship, over their sales progressions, over their fee structures and over their buyers,” explains Rathore. “We provide the software and the tech – we are an online auction-as-a-service provider and provide all the back-office infrastructure.”
Integration is very straightforward for the agent. “We ‘front-load’ the work so that the agent doesn’t have to do any of that. The whole point is that ours is the solution that allows them to benefit from minute one without having the heavy up-front cost of having to set up a department.”
Does Rathore see the percentage of auction sales in the UK ever reaching the levels seen in Australia where the figure for 2019 was 14 per cent with Melbourne hitting 30%? “I don’t see why the UK couldn’t go same way. The better-informed buyers and sellers are of the benefit, the pros and the cons, the more likely the whole sector is going to grow.”
A newcomer to the fray, at least in the UK, is Offr. Founded two years ago in Ireland, it has just launched here and claims to offer the ultimate in simplicity for agents: a button on their website, in the agent’s own branding, that does pretty much everything.
The Offr button allows buyers to watch virtual tours, download marketing documents and register to bid – the company describes it as the “Swiss Army knife of proptech”. Offr also links in to the agent’s CRM system, and there is a document vault where the vendor’s solicitor can upload searches and other information.
The whole registration process is screened using Offr’s technology, which allows an event-style auction to be held on the agent’s website. The agent has full control of what’s going on, and once the hammer goes down, Offr facilitates the document signing.
CEO and co-founder Rob Hoban believes the property market is undergoing transformational change. “If you think how the banking industry was 20 years ago, everything was completely manual – now you don’t blink an eye if you do everything online,” he says. “Housebuying is still a very manual, very inefficient process, with agents tapping away at their keyboards – what we are trying to do is eliminate all the admin side of it.
Housebuying is still a very manual, very inefficient process, with agents tapping away at their keyboards – what we are trying to do is eliminate all the admin side of it.” Rob Hoban, CEO and Co-Founder, Offr.
“We’re not trying to replace the agent, what we are trying to do is allow the agent to have more time to deal with the people who are more likely to transact with them.”
Hoban says Covid has been “a huge catalyst for change”.
“Just about every UK auction house has now gone online, they are rapidly finding their technology wasn’t built for online, and we are talking to a lot of them at the moment. I expect online auctions will become a greater proportion of sales – I don’t think we are going to suddenly get like Australia, but it wouldn’t surprise me that within five years we get to seven to ten per cent, maybe.”
We’ve all witnessed the death of the high street, as the retail model, already under stress, has changed to online shopping. It seems we could be witnessing a similar sea-change with auctions, not only with the switch from physical sales to internet auctions, but in terms of the percentage of residential property sold at auction. As Robin Rathore of Bamboo says, “The world has changed and I don’t think it’s going to go back to the way things were.”