Samantha Collett: existential crisis in the auction room

But alas, depending on which side of the fence you’re perching, change comes along. And this time it seems there is an existential crisis in the auction room.

Somewhere, somehow there is a quiet revolution happening beyond the fall of the gavel. Dissonant voices are growing and the whole harmonious auction scene is adrift.

The debate raging about what constitutes a guide price has far wider implications than the Advertising Standards Authority could ever have imagined. Defining a guide price is akin to open heart surgery across the entire auction industry. The debate has raised the question of auction house business practices: what are they, and are they justifiable?

Is conventional wisdom enough for keeping things as they always were? Is adding a few more words next to an asterisk to qualify exactly what is meant by a “guide price” sufficient for the new, shiny-eyed buyers who are entering the auction rooms?

And what do we really mean by this rule that guide prices should be no more than 10% above the reserve? Is that just for single figure guides? What about guides with a lower and upper end? And what of the ever-creeping presence of the plus-sign next to a guide? What does it actually really mean?

And accurate meaning is essential, especially when it comes to consumers. Because the auction world is changing.

Auction rooms are no longer thronged with just the dealers of old who knew the rules of the room. Today’s auction buyers are yet to be educated into the esoteric charms of how things work at auction. Bidding off walls, chandeliers and such accepted practices to reach the reserve are often accepted by those trained into the auction method of sale. Reserve prices are commonly accepted and expected by those in the know. But, what of those who are not yet in the know? From an outsider’s perspective, just how does this all look?

What price am I meant to be looking at? And, sorry, what does that price actually mean? And is that price anywhere near what I am going to pay? Describing this as confusing doesn’t cut it.

And it’s getting worse.

Given that the world of property auctions is currently under some guide price identity crisis, what are new buyers to make of the modern method of auction? Does a reservation fee mean they’ve won the property? Is it on top of the price paid? Have they definitely, 100% bought the property, like a “traditional” auction? And what exactly is the “modern” method of auction compared to the “traditional” method of auction?

Just what is a property auction nowadays, anyway?

It is an alarming question about a sector that used to be, and should be, very simple. Perhaps, more alarming so, at a time when we are seeing droves of new buyers entering the auction room for the first time, excited by this new-found method of buying and selling property.

Auctions have always been the most fantastically efficient way to buy and sell property. There are no estate agents to deal with, chains to worry about and a done deal, is a deal done. Speed, certainty, transparency, and maybe even a chance of a bargain have tempted increasing numbers to the auction room.

But for what?

To now be faced with confusion over what price these new buyers are meant to be paying? To not know if a property they’ve bid on is theirs to own? The climate has become confusing. The rules of the auction rooms need to be sharpened and adhered to. Harmony must be restored if auctioneering is to take its deserved place as an alternative, and arguably, preferable way to transact property.

Now is not the time for infighting, asterisking definitions, and trying to keep things as they always were. Now is the time to embrace change, to challenge conventional wisdom and to help new buyers into the auction rooms. The future of property auctions is aglow with opportunity – let’s make the most of it by being clear with consumers.

 

Samantha Collett blogs whatsamsawtoday.com and tweets @whatsamsawtoday