Agents should look to online auctions in a challenging market, it is claimed
Between October and December 2017, some £822 million worth of UK residential property was sold at auction, according to the Essential Information Group. Initially this may seem impressive, but it still only represents a small proportion of the overall sales market.
Conversely, one auction website in the US, Auction.com, boasted sales of $9 billion in 2016, with indications of further growth last year. So why is the figure not higher in the UK? And should agents be looking at auctions more, particularly in an increasingly challenging market?
According to Milton Rodosthenous, director of LetsBid Property Ltd, over the last decade society has become increasingly reliant on smartphones and tablets. This trend is particularly prevalent among the younger generations, who represent the buyers and renters of tomorrow, if not today. These soon to be property seekers compare losing their phone to losing a limb and it is clear mobile devices are changing consumer habits at an astonishing pace.
‘I would not put myself in the younger generation, but my phone still runs my life. It has gone from something I use to check emails and read the news, to something I use to buy groceries, manage my finances, control my home devices, watch TV, run a business and search for property,’ he said.
He pointed out that a few years ago, no one thought that online banking would replace activity in bricks and mortar banks, but the rapid closure of high street branches shows how misplaced that belief was. He considers property to be approaching a similar position. How long will it be until consumers start to swipe right’ to rent or purchase properties online?
‘The reality, in my opinion, is that this tipping point is nearly here. Various online property auction websites have started to appear and, particularly in the US, they are growing at an impressive rate. Alongside Auction.com, which has sold over 300,000 properties since its launch, there is Rentberry, the leading direct rental auction site in the US which now has plans to expand in Australia and Europe thanks to its initial success in America,’ he explained.
Due to the success of these platforms, real estate agents in the US have already started to adapt their practices to suit the needs of modern consumers. For example, Auction.com, rather like a portal, allows agents to upload available properties on behalf of their clients. This proves that despite consumers having the option of listing themselves via other sites, many still want to call upon the expertise of a local agent.
Using an online only service for ordering a taxi is fine, but for most consumers when it comes to buying or selling, one of the biggest transactions they are ever involved in, the presence of an agent is required to help them through the process. And when we add online auctions into the mix, the need for an agent is even more pressing.
Of course, there will always be transactional customers who want to go to market using the cheapest possible route and there will be some success for auction sites which allow sellers and landlords to go straight to the consumer.
‘There is no question that the digitisation of property sales and rentals has begun, but there are millions of people still out there who would like the assistance of a local agent during their property transaction. That is why we have created LetsBid: a platform purely for agents. It allows you to provide clients with a personal service and the reassurance that they have a professional handling one of the most important decisions of their lives,’ Rodosthenous explained.
He also pointed out that having agents involved in the online auction process not only improves the service for sellers, but for property buyers too. That is why we are hoping to compete with online property auction services that allow sellers and landlords to go straight to the consumer.
With a fall in property sales recorded by the Office for National Statistics (ONS) and HMRC, estate agents certainly need to diversify, according to Rodosthenous. These challenging conditions are being exacerbated by fee erosion, online competitors, the upcoming ban on letting fees and a lack of housing supply.
There are currently a high number of agents, predominantly in the North of England, using the modern method of auction to sell properties online. Many of them have seen incredible results and are championing this new way of buying property.
They benefit from working with committed buyers who have no fear of being gazumped, which is improving fall-through rates.
‘Many industry experts believe that the modern method of auction can take a larger share of the residential sales market than the traditional alternative and, in my opinion, this change will happen quickly as the industry continues to embrace technological change,’ Rodosthenous added.
Milton Rodosthenous is the director of LetsBid Property Ltd