■ Every day this week EG will be focusing on a different facet of auctions, from what to buy, where to buy it and how to learn from the pros
From a terraced house in Hull with a starting price just shy of £40,000 to a 6.7-acre development site in Newcastle with a starting price of £4m, it’s amazing what you can pick up online these days.
Both properties are up for auction through online portals operated by firms that also sell properties the old-fashioned way, “in the room”.
The home in Hull could be yours in just a few clicks at iamsold.co.uk, which provides auction services to a growing number of estate agents – in this case, EweMove. The site in Jesmond Dene, once home to Newcastle City Council’s own plant nurseries, could become your biggest online purchase yet if you log in to Lambert Smith Hampton’s portal, lshauctions.co.uk
Online property auctions are still very much in their infancy. But as proptech transforms every aspect of how we buy, sell, rent and manage our bricks and mortar, these and other firms are proving that the demand for online auctions is growing from both buyers and sellers.
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 believes the number of online auction sales is only set to rise as the market becomes more accustomed to this method.
Flexibility and tradition
The firm is also looking at whether virtual auctions on a weekly basis could work, to combine online flexibility with the excitement of a traditional auction. A real auctioneer would conduct a live auction online from a studio, with telephone and online bids running simultaneously.
As Cooke puts it: “The property market is going through exponential change.”
Other residential auctioneers already holding regular online auctions include Allsop (for new-build flats), Clive Emson, SDL Bigwood, Loveitts, Network Auctions’ Network E brand, and Shonki Brothers.
David Sandeman, who heads auction data portal Essential Information Group, believes online sales will eventually become the dominant means for buying property at auction. More than 20 auction houses are already using his online platform to sell properties.
“Whether you bid online or in the room doesn’t make any difference,” he says.
For commercial property, with typically larger lot sizes, LSH is so far the only firm in the top five commercial auctioneers to hold regular online-only auctions for selected properties. Head of auctions Oliver Childs agrees that online auctions will ultimately overtake the ballroom.
Electric atmosphere
While the atmosphere in the room can be electric and many investors place huge value on being able to gauge the mood in person and see who is bidding, a web-based sales service offers other advantages. For sellers, there’s the flexibility to choose the timescale for the sale, rather than being tied into auction dates; and for buyers, online auctions held over a period of several days can be a more convenient, less intense and less intimidating option than attending a central London or regional sale.
“It is more considered online, because you have a period of days – not everyone will want to buy in conditions that might make them impulsive,” says Robin Rathore, founder and director of Bamboo Auctions, which is providing online platforms to a growing number of auctioneers.
“We are attracting people to our auctions who have never previously thought of buying through an auction,” he says. “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. The auction houses have got to do this because there is a demand from vendors and buyers.”
How to buy through online auction
■ Register for alerts from sites such as iamsold.co.uk, bambooauctions.com and lshauctions.co.uk Some services, such as Network Auction’s Network E (networkauctions.com) require you to sign up for free with Essential Information Group’s Auction Passport.
■ Get authorised so that you are ready to bid: you will need to upload proof of identity, proof of address, and provide your solicitor’s details.
■ Understand exactly what you will be required to pay and when, should you bid successfully. There is plenty of variation and you will need to be prepared to insert your payment details.
For example, Bamboo Auctions offers some properties in a ‘traditional’ online auction: exchange occurs online, immediately when the timer reaches zero. If you are the successful bidder, you will be legally obliged to complete. You will be required to pay a £5,000 fee, split between a buyer’s fee and part payment of the purchase price. You will then have five days to pay the remainder of the 10% deposit. Completion is in up to 58 days.
■ Bamboo also offers conditional online auctions, allowing the successful bidder 28 days from the end of the specified time period to exchange. You will be automatically charged £6,000 towards a reservation fee. By placing the bid, you are authorising the auctioneer to sign the reservation agreement on your behalf.
■ Bidding will go up in pre-selected increments, reflecting the value of the property, and online auctions tend to have a system for extending the sale when bids are placed in the last minute or five minutes to avoid “sniping”, where bidders leave bidding until the last moment in the hope of being the highest bidder as the auction closes.
Five proptech solutions A private investor should know
Robin Rathore, founder of online property auction marketplace Bamboo Auctions, offers his top five property technology solutions.
■ Invest online through a property ISA
Saving through a property ISA, such as one provided by bricklane.com, allows investors to grow their savings in line with the housing market. Bricklane chooses properties that form part of a REIT, that your ISA invests in and valuations are carried out by Allsop. Crucially, investors can manage and withdraw their money with no notice period. This is a great way to link your savings to the housing market, which currently pays over 6% a year.
■ Get immediate auction finance and/or remortgage with online mortgage brokers
Together Money provides same day “in principle” decisions on auction finance, which is faster than many tech solutions or bots. Digital mortgage brokers such as Habito and Trussle are useful tools to access high street mortgages; the latter claims to manage over £1bn worth of mortgages on behalf of UK owners.
■ Find professional property services online
If you are looking to develop a property or start home improvements but don’t know where to find contractors, Plentific can help. Plentific operates a home services marketplace, allowing you to book professional tradesmen or get quotes online.
■ Search for investment properties for free
You should never have to pay to search for property, and Rightmove and Zoopla are the go to sites. Rightmove has now launched an auction filter, so you can find all available auction properties. If you are in search of commercial property, take a look at Realla, where you’ll find all commercial properties available for sale or lease.
■ Buy property at your convenience and exchange online
Online property auctions provide convenience and accessibility. Bamboo Auctions operates an online property auction marketplace in conjunction with auctioneers including Clive Emson, SDL Auctions, Loveitts, Williams & Goodwin, Shonki Bros and others. Buyers can search for properties that are exclusively available online, download legal documents, arrange open house visits and place bids 24/7. Exchange occurs online, immediately at the end of the specified auction period. The process is secure, convenient and transparent – making auctions more accessible to a wider market.
Julia Cahill and David Callaghan
This article appears in the latest edition of EG’s Property Auction buyer’s guide, available in newsagents from 20 May. For full and free digital access to the guide, please click here
