The auctions market is expanding once again – and auctioneers ?must broaden their service lines ?if they want to compete.
I read with interest Estates Gazette’s Auction Focus (20 September, pp105-117) and was not surprised by the differing stance my competitors take regarding eBay-style property auctions and whether this sales medium could be developed for greater use within our industry.
Data supplied by the Essential Information Group clearly demonstrates that the auction market is growing once again. In 2006 the commercial market reached a peak with a total raised for that year of £2.6bn compared with the market’s lowest point in 2012, when £1.04bn was raised, a decline in annual sales of around 60%. Last year the total raised increased for the first time in six years.
Indeed, during period from January to June 2014, auctions raised 18% more in total compared with the same period last year, from £513m to £605m. The volume of sales at our auctions has mirrored this positive trend, rising over the same period by 113%. And our success rate has risen over the period from 84% to 94%, against a market average of 78%.
Broaden service lines
As we drive further growth, we must broaden our service line so that we can compete in an increasingly international market and protect our business against market fluctuations. Technology will continue to improve and I suspect that online auctions will develop to be a useful alternative route to market.
Auctioneers will always have differing views and this is what drives competition and provides our clients with the choice they require and expect. I want to see a robust online platform created by the experienced professionals in our industry – rather than allowing inexperienced start-ups to enter our market and try their hand at it. We have seen this before in the traditional auction room where overseas firms have unsuccessfully tried to enter the market.
As an industry we continue to work hard to improve and develop our businesses, so we must continue to embrace change and provide the market with the variety of options that they are likely to require.
There is already choice in the market. Some prefer national sales such as ours held at a central London hotel, while others prefer a more regional sale that is more likely to be held in the local pub or sports ground. Telephone and proxy bidding, as well as bidding live over the internet while the auction is in progress, is commonplace – much to the delight of the auctioneer and their client as this gives us some confidence that the property is more likely to sell.
However, some buyers refuse to bid on this basis as they prefer to attend the sale and monitor the room in the hope that they can influence the bidding and buy the property at a lower price. Some operating in the wider sector do not or cannot use property auctions; perhaps these organisations are overly bureaucratic or they simply may not understand the process.
Different options
Every buyer and seller is different and so is every deal. As paid professional advisers we need to consider the different options available to us and be versatile enough to adapt our businesses to provide a rounded, best-in-class service.
Fundamentally, the key to selling at auction is about setting a realistic reserve price from the commencement of the marketing. As this is an intense three-week period, communication with our client and the market is vital and if this figure is unrealistic, it doesn’t really matter how the property is sold or where the auction takes place, the property will remain unsold, to the detriment of everyone involved in the process.
I urge those of you who haven’t been to a property auction to attend. The atmosphere can be electric, an effect that is almost impossible to recreate online.
We are a people business and interaction is the key to our livelihood, but technology is improving and people’s lives have become ever busier, so there needs to be room for these two sales lines to co-exist and flourish.
Oliver Childs is head of auctions at Lambert Smith Hampton
