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Up the bidding!

Sold at auction imageNot so long ago the auction industry was relatively simple. Agents took their probate properties to a local or regional auction house and shared the fees with them when the
property sold, while, at the same time, hopefully achieving a quick and good price for their vendor.

Or they may have run their own auction in a local hotel or, in the case of the large multi-branch agents such as Countrywide, Barnard Marcus and Savills, in key city centres.

But this familiar scenario is melting away under the white heat of competition, helped by the advent of digital marketing.

“It’s fair to say that the traditional auction set-up is fragmenting into different models and that’s why some agents are becoming auctioneers and others are buying franchises,” says Paul Thompson, Managing Director of Pugh & Co.

There’s plenty to choose from. Auction House offers agents partner status via branded and territory-based auction franchises. Network Auctions offers agents access to a national auction audience via mainly London events, while Pugh & Co, through its ‘The Auction People’ brand, offers a way for agents to set up their own local auctions under the brand but without buying a franchise.

Then there’s IamSold.com which offers agents the opportunity to become a supplying partner to its dozen auction centres around the UK – including an online auction facility.

For us, the main advantage of working within Network Auctions is probably their professionalism – it is an extremely well run event. David Midgely, Richard Godsell.

I asked agent David Midgely, a director at Dorset agent Richard Godsell and Colin West at Tiffen & Co. in Cumbria, to explain which route they took, and why.

DAVID CHOSE NETWORK AUCTIONS

David Midgely imageRichard Godsell is an independent estate agent in Dorset with three offices. Established in 1928 it now has a reputation as a long-standing and reliable local property business.

It operates along one of the South Coast’s most beautiful stretches of coastline and, most probably, most affluent. The offices are in Christchurch, a seaside town to the east of Bournemouth, Highcliffe and Southbourne. The company has 15 staff, spread across the three branches.

“In all these areas we pick up the middle to higher-end properties,” says David. “A typical kind of home is one we sold at auction in October – a five-bedroom early 19th century house on Christchurch High Street with a guide-price of £850,000.”

Christchurch house image

Christchurch house sold at auction for £850k.

Richard Godsell had been running auctions pretty much since they were established and previously the company organised and operated its own local auctions with its own staff and resources, usually by renting a local hall or room.

But approximately a year ago they decided to use Network Auctions, which offers regular auctions in Birmingham and in London. Richard Godsell is a partner agent in the London auctions, as most of their bidders come from the capital and the home counties.

David says, “For us the main advantage of working within Network Auctions is probably their professionalism – it is an extremely well run event.

“The auctions take place at The Grosvenor House hotel on Park Lane and by having all of the partner offices there (offering properties for sale together) the auctions are always going to be much bigger in scope than we could ever expect on our own down here.”

“This way we get more people coming on the day and a lot more attention for the auctions in general.”

Network Auctions bidding image

Bids coming from all quarters at Network Auctions.

David says he doesn’t mind that there are multiple Network Auction partner agents all funnelling properties into each catalogue and online listing, as it enables him to hit a much wider audience even though some of the agents within the network could in theory be in competition with him.

But a specific benefit for David’s business, he says, is that because his market in Dorset is such a highly sought-after area for second homes and retirement properties, the people bidding for properties at these auctions are more likely to be his target auctions – and that’s something the auctions he organised in Christchurch were much less likely to achieve.

WHAT ABOUT COSTS?

“There is a cost, but it’s an investment,” says David. “When I’m out on valuations and discussing the method of sale, I am able to offer them the possibility of taking their property to the auction in London, rather than one in Christchurch town centre!

“Recently I had a property that had been the lady’s family home for 70 years, when she passed away it needed a huge amount of work. I spoke to the executors 200 miles away and offered them (as required) the different methods of sale including private treaty, sealed bids or an auction.

“I recommended auction and it had a guide price of £265,000 but actually sold for £310,000 in London – which made the family very happy. I think that offering my clients the best possible service was an investment that I was very happy to make and I’d make it again.”

COLIN CHOSE AUCTION HOUSE
Auction House Cumbria image

Auction House Cumbria.

Colin West, who runs the Cumbrian fourbranch estate agency Tiffen & Co., took on the Auction House franchise for Cumbria in 2008 for two reasons.

“We were being instructed by asset management companies, through our estate agency branches, to sell properties but if they weren’t sold within a set period of time they’d be taken off us and put into a London auction room,” says Colin.

“We were of the view that they would sell for more at a local auction so we decided to set up our own, but wanted to have it under the auspices of a national brand, which is where Auction House fitted the bill.”

Originally launched under the Tiffen brand, the only competition Colin faced was the regional auctioneers like Pugh & Co and the national operations such as Allsop.

“We quickly started to get better prices for our auctioned properties because we were attracting local investors as well as regional and national ones through Auction House” says Colin. “Then we started getting enquiries from competing estate agents wanting to enter their properties into our auctions.”

So they decided to rebrand their auction operation as Auction House Cumbria and for it to be separate from estate agency. “As soon as we did this some 90 per cent of the estate agents in Cumbria started introducing stock to our auctions.

That gave Auction House Cumbria several sources of properties – direct or from their own marketing activities, via Auction House UK and from partner agents.

“I would say 50 per cent of our catalogue is now made up of partner agent properties, helped by the fee sharing arrangement we have with them.”

“We then took on the Auction House North East franchise and so now we have one unified catalogue and put on between 70 and 100 lots in each auction and seven auctions each year. So it’s turned into something of a beast!”

OTHER OPTIONS

If you would like to run your own auctions rather than offering your properties to a larger, more regional or national network, there is middle way if you don’t want to sign up to a franchise-style commitment.

The Auction People, which is an arm of auctioneer Pugh & Co essentially offers a ‘partnership’ between you and them that enables estate agents to tell clients that they have access to a national network of auctions. These take place regularly in Manchester and Leeds at football grounds within both cities.

What the company really offers is a way for agents to offer an auction selling service that keeps the client relationship between the agent and the vendor intact, instead of shifting it to a third party auctioneer.

“We can do it either the traditional way where the agent places properties for sale through one of our auctions, but The Auction People brand enables them to sign up and be a partner agent so they can say to their clients that they have the ability to sell by auction,” says Paul.

This also means that the fees made from the property are kept within that relationship, unlike other models where fees are shared around. “And we don’t have any geographic restrictions,” days Paul “So, we don’t say, for example ‘you’re the provider in the West Yorkshire region only’. Instead, any estate agent who wants to sign up to our deal can say to their clients, ‘We partner with The Auction People’ instead of saying ‘no, we don’t offer auction sales’ or ‘we’ll pass you on to a local auctioneer.’

“At the same time it means our partner agents don’t have to set themselves up as auctioneers, which is, in 99 per cent of cases, just not practical.

“We deal with single-branch agencies up to large, national firms with hundreds of branches. They know we offer a safe pair of hands and exposure to a national market – at our last auction at Manchester City we almost got to the stage were we had to shut the doors it was so busy.

“I think it’s all about exposure to the widest market – the more, and different types of, buyers that can be there bidding will help get the best price for a property.”

AUCTION HOUSE CONTACTS:

Auction House www.auctionhouse.uk.net
Clive Emson www.cliveemson.co.uk
Iam-sold iam-sold.co.uk
Network Auctions www.networkauctions.co.uk
Pattinson National Auction www.pattinson.co.uk/auction
Pugh & Co. / The Auction People www.theauctionpeople.co

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