The internet and the spread of social media have transformed the way auction houses market themselves and the properties they sell. Does that mean that in future auctioneers will have to be tech-savvy youngsters – Piers Wehner finds out
At the top of the residential auctions leaderboard, Allsop and Savills are comfortably entrenched. Both raised around £200m over the past year, £50m more than their nearest rival. Both are established names. Both seem unassailable.
But now, new, hungry firms such as Auction House London, led by young bucks with a flair for modern technology and more than a dash of ruthless ambition, are quickly climbing up the table.
Since its founding in 2007, AHL, part of the national Auction House brand, has been rapidly gobbling up market share.
This year’s EG league table for residential auctions, based on figures from the Essential Information Group, showed that it had climbed from 10th place to fifth in terms of totals raised, after a 103% increase brought its total to £46.8m. It will take a lot more than that to rival the £200m or so garnered by both Savills and Allsop, but the number four and number three spots – held by Clive Emson and Barnard Marcus – are definitely in AHL’s sights.
Should the Old Guard be nervous? Or are they indeed unassailable?
“No, no, no! I’d never say that,” says Savills’ national auction director, Chris Coleman Smith. “We aren’t unassailable. You can’t work that way. Think like that and you’re dead.”
His counterpart at Allsop, Gary Murphy, takes a similar stance. “Competition is a good thing,” he says. “As far as Allsop is concerned, it keeps us on our toes and challenges us to continually improve.
“Some thrive on competition, some suffer,” he adds, leaving no doubt into which category he would put Allsop.
“It doesn’t matter whether we are the biggest auctioneers in the universe or the smallest,” says Coleman Smith. “The main thing is talking to people in a down-to-earth way – or you get a slap in the face.”
But will changing technology allow smaller rivals to gain an upper hand? And will that upper hand slap the Old Guard in the face? According to AHL’s Andrew Binstock, it will.
“We are mostly in our 20s and 30s and very internet-savvy and very media-savvy, very knowledgeable about the London property scene.” His rapid patter is forthright and oddly hypnotic. “And that scene is aggressive. It isn’t like what it might have been in the old days. It isn’t two old gents nodding and smiling and saying you go first, thank you so much. It is dog eat dog. Everybody wants their piece.”
AHL’s piece is presently £46.8m, according to the EIG data, putting them in fifth place. But Binstock believes his firm has already climbed further.
“We have already beaten some well-established names. At the moment we are number four. We only set up in 2007 and now we are number four.”
Binstock puts this down to two factors: knowing how to make the most of technology, and being young and hungry.
Those Binstock sees as the Old Guard just can’t compete, he says .
Certainly, technology is changing the sector. “When I started at Barnard Marcus it was 1989 and people were just starting to send e-mails as a novelty,” says Chris Glenn, BM’s divisional managing director of auctions. “Now if you don’t have an e-mail address you just aren’t there. You don’t exist.”
The modern age is, he argues, that of the smartphone. “We carry around, in our pockets, very powerful computers. We call them phones, but they are powerful computers.”
In many ways this has been a godsend. “Technology has transformed our business massively in the way we can get and compile information,” says Glenn. “That is a tremendously powerful tool.”
Also, some things are just easier and cheaper. For instance, legal packs can now be downloaded at the tap of a finger. “Before it was a matter of phoning up and requesting one and sticking £10 on your debit card,” Glenn recalls.
Savills, meanwhile, has recently launched a specific site for all the legal downloads.
Other areas are changing more slowly. At Savills the print run for the catalogue may have gone down, but there is still a catalogue. Glenn argues that if he scrapped Barnard Marcus’s catalogue, yes, he might save a bit of money, “but there wouldn’t be a Barnard Marcus around for much longer. It’s what the customers want.”
But technology is having a huge impact on a vital component of the business – how firms market themselves and their lots.
And these young upstarts, who are putting technology at the heart of their marketing strategies, argue that this gives them the edge.
“We market the hell out of each property,” says Binstock. “We are on Rightmove, we are on Zoopla. We e-mail everyone who has looked at any similar property.”
He is dismissive about his rival’s claims to embrace the opportunities offered by the web. “We do and we get hundreds of leads. And, yes, some of them are nothing, but we would rather have too many than too few.”
He believes the relative youth of his team makes it easier for them to exploit new technology. There are nine people in Binstock’s team and all are in their 20s and 30s. “All the well-known, established guys – they are good and they do it their way. But they are old. And they do it old school. We don’t.”
Savills’ Coleman Smith says that is nonsense.
“We are 100% interested in online marketing,” he insists. “The strategy – if you can even call it that – is to spread your message as far and wide as possible. You should use whatever works – online, e-mail, calls, adverts, Facebook…”
But which cutting-edge platforms you use is not important.
“The main thing is about marketing product,” says Coleman Smith, “whether you do it online or with a billboard around your neck.”
In one sense the titanic two’s biggest possible piece of marketing is already in the bag. Allsop and Savills account for around 25% of the sector. In the minds of Joe Public, they are The Auctioneers for property, in the same way that Christies and Sotheby’s are for objets d’art.
But Murphy is far from complacent and is investing in a new auction website and management systems.
Binstock insists that this game is now for the youth. “I’m a big fan of LinkedIn, Twitter and Facebook. And I use them all the time.
“Some guys say that they use social media but most of the time that is just lip-service. You have to really enjoy it and engage with it.”
Which seems to be the real crux of this issue. The arrival of AHL on the scene is not just putting a spotlight on technology. It is also highlighting the clash between youthful drive versus the experience which comes from age. (See box)
For the Old Guard, technology will always be the servant, not the master.
“I hate it when I hear the phrase ‘everything is on the internet, go and look at it’,” says Coleman Smith. “That means, in other words, go away.”
Auctions, he reiterates, is business built on communication and interaction. “Technology can make that so sterile.”
There must be a middle-line, says this remarkably adaptable and tech-savvy Old Guard. “We would be mad to stick our head in the sand and ignore technology,” says Glenn. “But we would be equally mad simply to automate our business. As soon as you stop talking to people you might as well turn off the lights and go home.”
Online auctions
“Auctions are all about service and interaction,” says Savills’ Chris Coleman Smith. “Human interaction. Not clicking on a computer. That’s for eBay.”
So what about the smaller firms offering solely online auctions?
“I hope the clients that go to them are happy,” he barks. “End of quote!”
Some are certainly pleased at what they are seeing. In March Google bought a $50m stake in Auction.com in the US. And the outgoing head of auctions at CBRE, John Townsend, believes that online auctions could be the future.
Selling solely online means smaller ventures can get a toehold in the market.
John Pye & Sons, a Nottinghamshire-based firm of chattel auctioneers, began holding online property auctions a year ago.
“We were the first to make the transition from live to online with the chattels actions,” says business development director Sheldon Miller. “That’s the model we are looking at for the property division.”
For Miller, it just makes sense. The firm has 72,000 registered bidders and buyers. “Rather than asking them to attend a set place on a set day, we come to them. On their computers.”
But, for once, Auction House London’s Binstock and Barnard Marcus’s Glenn are in agreement. It isn’t for them.
“It will never take off,” Binstock states. His raison d’être is that he is the man who can squeeze every penny out of the room. “I can’t do that if it is all online.”
Glenn picks up the theme. “Standing on the rostrum, I can gauge all sorts of information if they are in the room, which I can’t do if they aren’t.”
It would save money to do it online, admits Glenn. “After all it costs us tens of thousands of pounds just hiring the rooms each year. But the simple truth is that our customers don’t want it.”
AHL does offer a live, online feed for its auctions. As does Barnard Marcus.
But people are far less likely to buy a £500,000 property by clicking a mouse, argues Binstock, especially as £50,000 would immediately leave your bank. “It’s not like buying a box of spanners.”
Youth vs experience
Why is Action House London growing so fast? According to Andrew Binstock, the answer is simple: “We are younger, we are hungrier. We love it.”
But for Allsop’s Gary Murphy, experience trumps youthful hunger and drive every time.
“It’s not just about buying ads or modern technology. It’s also about knowledge, experience, professionalism and good advice.”
Murphy’s team has, he says, more than 300 years’ experience between them. “That’s what has kept us in the number one position for so long.”
Barnard Marcus’s Chris Glenn is even more hostile to this idea that somehow “youth” is paramount.
Some of the techniques used by industry upstarts have dragged regulators into this row.
In July the Advertising Standards Authority upheld a complaint against Auction House that several properties it had sold at auction had had reserve prices higher than the guide prices.
The ASA Council concluded that Auction House UK listed guide prices that were misleading and breached its codes. As well as requiring Auction House to avoid repeating the practice, the ruling prompted RICS to send an “urgent” alert to its auction members on their obligations to explain guide prices.
Now the sector has to put a caveat on every piece of marketing, explaining what a guide price is.
It is unlikely to be the last row to divide the auctions world.
