Change in the Property Industry: It's Already Here
On 29 January 2021, I will have worked in the property auction industry for 25 years. A quarter of a century is certainly long enough to have experienced my fair share of market peaks and troughs, but also to have witnessed some of the most significant developments in our industry – some gradual, some almost instant.
In 1996 my computer was a mere paperweight, and to have half a chance of mobile phone reception in central London, you had to pull the aerial up (not to mention the spare battery stored inside your jacket pocket to keep it running all day).
By the early noughties, increasing commercial use of the internet, along with the growing popularity of programmes like Grand Designs and Homes Under the Hammer, meant we could attract a much wider private investor audience to auctions.
The Royal Mail postal strikes in 2003 precipitated immediate change. Legal packs, which had been painstakingly photocopied and posted to interested parties, were moved online in response. Digital transformation – almost overnight. And making this information instantly available and easily accessible opened auctions to a new range of market participants.
The introduction of property portals drove the next phase of change, allowing estate agents and auctioneers to market directly into people’s homes. Another widening of the traditional auction market to buyers and sellers who may not have considered this option before.
A new catalyst for change?
Today, auctioneers are adapting and transforming yet again, this time in the face of unprecedented circumstances. The auction model tends to be resilient in the face of economic downturns due to its efficiency but an industry whose foundation is large-scale public gatherings has been suddenly and fundamentally challenged by the national lockdown.
Auctioneers have been jolted into seeking alternative routes to market. In some cases, they have worked to preserve the essence of the ballroom tradition – live-streaming an auctioneer from the rostrum, with bids taken online, by phone and by proxy. Others have moved fully online for the first time.
It’s true that this is uncharted territory for many but there are positives here: there is much to be gained from a tech-focused approach to property sales.
For one thing, online methods remove the need for a ‘one size fits all’ approach to asset marketing. We can, and should, tailor the route to sale for each asset, setting an appropriate marketing period and opening bidding at the optimal time.
Consider that the UK auction market has continued to average £4bn per annum for the past decade – not exactly a story of dynamic growth, unfortunately. Leveraging the flexibility of a digital bidding platform to provide bespoke options for clients could prove game-changing, making auctions an effective method of sale for a wider range of asset types – by class, sector and price point.
Technology can also make us better advisors. All auctioneers are comforted by pre-auction expressions of interest and a busy room on the day, but an online system can replace such signals with hard facts, available at the auctioneer’s fingertips and ready to aid client decision-making and strategy.
Of course, good auctioneers will have a fair idea of interest in a property as the auction approaches, but ultimately there is uncertainty for both auctioneer and client until the moment that bidding opens. The opposite is true for online methods. Pre-registration, which includes provision of customer information and the transfer of a refundable bidding deposit, ensures compliance with AML regulations and also pre-qualifies bidders – a key factor for sellers.
PropTech: flexibility & convenience
Meanwhile, newly minted online auctioneers should not be concerned about curbing spontaneous purchases: a robust digital auction platform will easily facilitate this. Potential purchasers can register at any time before bidding opens. Registered parties can seamlessly move their deposit from one lot to another if they miss out on the first. Closing times for bidding can even be extended if late interest is received, giving auctioneers another tool to ensure best price for clients.
Simple convenience plays a role here too. As consumers, we have come to expect online services which streamline traditional processes, providing greater flexibility and access. The fact is that we are more likely to be surprised that we cannot do something remotely than to feel amazed when we can. I do not believe that our buyers and sellers will prove to be outliers here; they will come to expect seamless digital property transactions too. The next generation of auction users – the so-called digital natives – certainly will.
The circumstances that have prompted change in the industry over the past 25 years have differed, from strikes to changes in consumer behaviour and now a global pandemic, but our responses share a common theme: digitalisation – and the gradual widening of the auction market as a result.
This digital trial-run may have been enforced by circumstances, but I believe it will permanently alter perceptions about the best route to market. Ultimately, this period may prove to be the catalyst for enduring change in the property industry, leading to greater adoption of technology across the sales cycle, from marketing to contract exchange.
An abridged version of this piece originally appeared in Property Week.