Online sales will eventually become the dominant means for buying property at auction, according to industry expert David Sandeman.
Sandeman, who heads auction data portal Essential Information Group, said more than 20 auction houses were already using his online platform to sell properties and he was talking to all the major London auctioneers about launching online sales.
“The business has been slow to pick up on it on the grounds that ‘if it ain’t broke, then don’t fix it’, but the industry is coming round to it. It is very much in its infancy. If someone breaks clear and goes online then everyone will do it.
“Whether you bid online or in the room doesn’t make any difference,” he said.
Sandeman said some auctioneers were merely collecting bids online to be given to the auctioneer at the ballroom sale, while others were offering lots exclusively online. Most of the top 10 residential auctioneers by volume now offer some form of online auction, but only one of the top five commercial auctioneers – Lambert Smith Hampton – holds exclusively online sales.
Sandeman’s comments come as auction service provider IAM Sold reported that 62% of its sales in February were carried out online. It sold a total of 254 residential lots, raising £26.6m, with only 38% selling in the room.
Managing director Jamie Cooke said the number of online auction sales would continue to rise as the market became more accustomed to this method.
The decision on how to sell an individual property is based on location, timing and client preference. IAM Sold is also looking at whether virtual auctions on a weekly basis could work. “The property market is going through exponential change,” Cooke said.
Oliver Childs, head of auctions at LSH, agreed that “ultimately online will overtake the ballroom”.
“Percentage success rates are similar for online and in the ballroom,” he said.
A web-based sales service allows the seller to choose the timescale for the sale, and they are not tied into auction dates, he added.
However, Network Auction director Stuart Elliott said traditional auctions would continue to dominate.
“Our primary business is the traditional auction – and the more properties we have in our catalogue, the better. Online is a secondary route,” he said.
“I don’t think it is a threat to the traditional auction room because the majority [of sellers] are not Mr & Mrs Smith selling their own property.”
Online auctions worked much better for owner-occupiers who have been frustrated by not selling through private treaty and want a quick sale, Elliott said. They also liked conditional sales with 20 working days to exchange contracts and another 20 to complete. “I really do feel that this should take off, and we will see a lot more of it over the next 10 years.”
Network Auctions has sold 20 properties through its “Network E” internet service since it launched a year ago. A four-bed detached house in Watford with a valuation of £850,000 sold for just over £1m after 37 bids.
Web sales bring in new buyers
Bamboo Auctions is working with auction houses including Clive Emson, SDL Bigwood, Loveitts, and Shonki Brothers to provide online platforms.
Founder and director Robin Rathore said: “I don’t think online will replace the ballroom auctions. But the auction sector makes up about 2% of the property market, and I think it should be 10%. Online sales are a way of increasing the number of people using auctions.
“We are attracting people to our auctions who have never previously thought of buying through an auction. It is more considered online because you have a period of days – not everyone wants to buy in conditions that might make them impulsive.
“The auction houses have got to do this because there is a demand from vendors and buyers.”
Pioneers prove there’s appetite for online auctions from both vendors and buyers
Oliver Child’s team at Lambert Smith Hampton is marketing its largest online auction lot to date, with a starting price of £4m. The 6.7-acre site in Jesmond Dene was once home to Newcastle City Council plant nurseries. It is being sold on behalf of the council as a residential development opportunity. Bidding will open at 12pm on 5 June and close a week later. LSH’s website shows that 25 people are already “watching” the lot.
LSH held its first online sale in February 2016 and has offered around 20 properties in the past 12 months, with a 90% success rate.
It has sold four lots for Severn Trent at an average of 545% above reserve. Commercial lots have sold for an average of 7% above reserve for clients including joint LPA receivers at Savills, Opus Restructuring, Moorfields and private property companies.
LSH has also sold residential assets online for clients including joint LPA receivers at GVA. Residential lots have sold for an average of 5% above reserve. Its largest online sale so far was a partially completed residential development of 10 homes in St Leonards-on-Sea, East Sussex, which raised just over £1.7m last July.
Allsop has sold 614 lots in Ireland through online sales since March 2015, raising €107m and achieving an 85% success rate. It also offers an online service for off-plan new-build properties called “New Homes Online”.
Gary Murphy, partner at Allsop, said: “The Irish market is different from the UK. We tried to retain the room, but found it wasn’t needed. It is far easier online to allow a competitive environment by drawing in people from all over the world.
“In the auction room you see who is bidding against you. But when people see higher prices being achieved online it is very quickly going to change.”
