In 2014 new sellers and new bidders have come to more auctions. In some regional markets auctioneers are taking novel approaches to selling. But, to grow their businesses, auctioneers must address some key challenges.
Homes Under the Hammer has been running for 11 years but still gets impressive ratings for a daytime TV show. Ebay has become widely trusted and consumers and businesses have spent more than $65bn (£41.5bn) on its online auction site since 1999. There are more property auctions and many auctioneers claim that they often feature new faces. But in 2015 auctioneers must deal with challenges posed by tech-savvy buyers and sellers increasingly based outside the UK, changes to consumer protection law and a surge in consumers’ expectations.
Can auctioneers adapt their remarkable marketplace, allegedly devised in Babylon in 500 BC, to meet these unprecedented changes? Can they exploit new opportunities but also maintain the trust earned over decades from their clients and bidders?
A key challenge is keeping auctions transparent. How would a consumer define a guide price? That is something that has exercised the minds of many auctioneers and, recently, the Advertising Standards Authority. Rather than taking a technical approach auctioneers look set to go further by working with sellers so that bidders understand what is on offer. Auctioneers are asking themselves how a consumer bidding at their auctions would feel if a so-called guide price turned out to be just old-fashioned bait advertising. But this particular consumer has not simply walked into a shop offering shoes “from £25” when the cheapest pair inside is £35. He or she will have spent money on a survey and legal due diligence and will probably be keen to tell the world of the whole bitter experience via Twitter or, worse, word of mouth. Businesses would feel just as hacked off by such an experience.
We live in “always on” Britain. People shop online for groceries at 3am – then they might turn to the property market. Auctioneers have long embraced the internet. Online legal packs and other key data have all been a central part of an auctioneer’s offering for many years and most offer a facility for online bids alongside conventional bids with terminals in the room. But few sellers have yet decided to ditch their agents and rely solely on online listings just as few have left the auction room itself and decided to accept only online bids. But, there is nothing to fear but fear itself – any legal obstacles can be overcome by the use of electronic signatures. Such sales will probably not suit all lots but they look set to suit some – Essential Information Group provides Countrywide’s Property Click website offering and is ready to support those auctioneers who are ready to sell some lots purely online.
Some commentators remain puzzled by “reservation fees” and “conditional sales” but, in some regional markets neither raising money from sales nor getting finance is straightforward. And, both sellers and bidders seem ready to accept these innovations which give a successful bidder an exclusivity period to conclude a purchase at a fixed price.
Standardisation will continue to help the industry – more than 90% of auctioneers now use the Common Auction Conditions so that both the contract that is (hopefully) reached and the relationship between the auctioneer and bidders are set out in plain English. The conditions take away the ability for sellers to bury bad news – rent arrears, for example, have to be dealt with in the special conditions. Edition 4 of the conditions – which will reflect contemporary consumer rights – is due to be published in 2015.
Next year might bring interest rate rises and there will be a general election along with other events that influence property values.
Auctioneers, with their understanding of those values and an open and vibrant market-
place, will survive. But, if they really want to take their industry forward, they need not just to look at and enhance their own professional values in the changing environment, but also to be seen to be rigorously applying those values.
My thanks to Richard Auterac of Acuitus, James Emson of Clive Emson and David Sandeman of EIG for their contributions.
Nicholas Redman is a senior professional support lawyer, DLA Piper
