Like most other businesses, the Covid-19 pandemic has proved to be something of an evolutionary period for the property auction business. In the space of just a few days lockdown meant auctioneers had to choose between shutting down their businesses completely, or moving what they could online. In this report we will look at the effect this sudden forced change has had on the development of the online property auction model.
Firstly, it is probably fair to say that, in a world where almost everything can be bought and sold online, the property auction business has steadfastly hung on to some of its centuries-old traditions. Although it has been possible to buy and sell property online for a while now, most would agree that the ‘ballroom’ type of auction has remained the predominant way of auctioning property.
It is also important to consider that there is not just a single online auction model. Many conventional auctions have been conducted ‘in the room’ but still streamed online and/or offered bidding online as well as in person, by phone or proxy. Pure online auctions are only held online, may run over a number of days or weeks, and are normally conditional auctions only.
It may be a good idea to briefly summarise some of the pros and cons of both online and offline auctions. Online auctions are (or ought to be) quicker, cheaper and easier for buyer, seller and auction houses alike. In theory at least, a property can be listed online and sold immediately rather than waiting for the next auction day. They make it possible to conduct a transaction quite literally from your armchair, reach a wider national or international market, and encourage bids from bidders who are unable or reticent to bid in the room.
However, a major implication of an online only model is that they lack the atmosphere and maybe drama of the in room auction. Significantly, most auctioneers will agree that this is an invaluable way of generating interest, fostering competitive bidding and of ultimately attaining the best price for a lot.
Next let us take in a few figures which may (or may not) illustrate how the move to online auctions has impacted the market over the last few months. Essential Information Group (EIG) collates data from over 400 auction houses and around 38,000 lots annually. Its figures say that 2018 and 2019 saw a drop of 8% in lots offered and in the amount raised of 13%, although it adds that the biggest falls were seen in the commercial market. At the start of 2020, pre-Covid, managing director David Sandeman forecast that auction activity would level out and possibly increase – if only in single digit percentages – this year.