What a difference a decade can make
In today’s auctions landscape, the online model is becoming widely accepted as a cornerstone of the industry, providing a much-needed layer of data, analytics and statistical evidence throughout the property sales and acquisition process. But selling property at online auction may not be as new as you think.
Ten years ago, the Nuclear Decommissioning Authority sold three separate plots of land through an online auction model. The sale, overseen by BidX1’s Simon Riggall (who was head of auctions at Colliers International at the time) raised a record £387m over the course of a seven-week bidding battle. The price was considerably more than expected, and still remains the highest figure ever achieved at an online property auction.
The online model was chosen by the NDA due to the difficulty in accurately valuing the land and the knowledge that the sales process would provide a transparent, competitive approach to market for the expected international corporate bidders. The method of sale allowed for an extended marketing period and, due to the platform’s flexibility, breaks were taken throughout the sales process to allow buyers to have conversations with their advisers.
The flexible model was adopted right up to exchange of contracts, allowing bidders the opportunity to pay the best price.
The process was doubted by those clinging on to real estate traditions, as so often is the case with industry change. However, while the auction technology used in the NDA sale was a simplified version of what we have today, the transparent, flexible online format proved effective, and 10 years on those benefits remain the same.
With improvements in technology and the ability to aggregate and analyse data, the online auction platforms of 2019 are far more advanced and widely accepted.
The role of the vendor hasn’t significantly changed, but buyers most certainly have. Smartphones are now ubiquitous; consumers are used to transacting online, and on average 42% of bidding on the BidX1 platform is done through a smart device. People are buying property at the click of a button in the same way they would order an evening meal.
In the past, potential buyers would take time off work to go to a ballroom auction. Now, thanks to the internet, they have the power to bid from any location.
Our July auction catalogue saw views from 93 countries and a number of successful bidders were based abroad. Geography isn’t the barrier to purchase as it was 10 years ago.
However, reflecting on where we are today to where we were 10 years back, there is still an awful lot the auction world needs to be doing.
According to Essential Information Group, between 2009 and 2018 the average number of lots sold at auction approached an impressive 25,000 per year. The average sales total was slightly over £4bn per annum with very limited industry growth in real terms. Put simply, sales via auction have stagnated.
However, with the tools in our armoury unquestionably better and more advanced to accommodate clients’ needs than ever before, we as an industry need to be looking at what else we can do to further what is an excellent method of sale for both vendor and purchaser.
I believe the answer lies in incorporating more high value and private treaty assets. The NDA sale proved this can be done, and with more data and analytical insight at our fingertips than 10 years ago, it shows what auctioneers can – and need – to be offering clients.
We have to think outside of the box and move with the times, much like the NDA sale did a decade ago, and much like we are doing at BidX1 with our digital platform.