Lots to lose by ignoring online auctions
Auctions are a highly efficient method of buying and selling property. However, just 1.8% of properties in the total property market are sold by auction.
At the recent RICS Auctioneering Conference, a meeting of the top property auctioneers in the country, once again the topic of how to grow the market beyond 2% was raised.
Suggestions included commissioning an advert, having a unified organisation responsible for education around auctions and showing more episodes of Homes under the Hammer at prime time. All fantastic suggestions, but the suggestions mentioned at the conference failed to address the fact that consumer markets are rapidly changing — economically, socially and technologically.
Bamboo Auctions was established with a mission to increase the size of the auction sector in the UK by making auctions more democratic, more transparent and more accessible as an efficient method of buying and selling property.
We want to increase the size of the auction sector in the UK as a whole, by collaborating with existing auction houses to encourage greater use of online auctions.
What’s more, we’re the only online auction marketplace to carry out CDD/anti-money laundering checks on every single bidder before they can place a bid. The process is done online, with an instantaneous result.
Online auction is the most flexible way to sell a property. I have often stated that using an online auctions are one way to increase the total market beyond 2%. Our own statistics, which are not published on EIG or any other data gathering company are starting to show this. We have passed over 200 new vendor leads, each with multiple properties, to our innovative auction house partners, who are listing these for sale by online auction. Most of these are new vendors would never had considered auction to sell their properties.
Given the benefits of online auctions, I wanted to take some time out to address some of the comments we have received from those auctioneers who are yet to embrace online auctions.
“Online auctions will replace room auctions”
Part of the problem around online auctions is a perception that they will replace room auctions entirely. This perception may in part have stemmed from examples of other industries e.g. train ticket machines and self service check outs.
Rather than compare online auctions to self service check outs. Instead compare it to the emergence of e-books. Some people prefer reading books on their kindle, others prefer reading paperbacks. In the same way, some buyers and sellers prefer the room, others will prefer online.
“You don’t get the buzz of the room when selling online”
One of the presentations at the RICS Auctioneering Conference mentioned that the room is the best way to generate adrenaline and cause greater numbers of bids. The presentation directly compared online auctions to room auctions as if they were the same thing.
There are clear differences between room auctions and online auctions when considering the psychology of bidding. Both are competitive processes, but where one involves stronger impulse decision making, the other involves a stronger sense of ownership.
The room auction has a more intense sense of scarcity; the “fear of missing out” is greater, because the selling time frames are shorter. This encourages impulse bidding.
The greater length of time involved in an online auction increases the bidder’s premature sense of ownership of, and attachment to the property. This is the endowment effect. It pushes bidders to bid higher than they might otherwise, for fear of losing the property that they already own in their mind.
What this shows is that the “buzz of the room” is not the only way to generate bids.
CASE STUDY
This property in Bristol was put listed for sale by online auction with Clive Emson. It received over 40 unique bids (i.e. not auto-proxy bids) and sold for over £200,000 over the guide price.
