Online auctions keep the property market functioning

COMMENT: While the private treaty market stagnates, online sales are standing in for the ballroom, says Allsop auctioneer Gary Murphy. 2020 had started with such optimism. There was finally closure on Brexit. We had a new prime minister with a strong majority. Buyers actually queued to get into our February auction. The ballroom of the Intercontinental Hotel had to be extended to accommodate the crowd. The sale raised a total of more than £45m as bidders fought more aggressively than we had seen in years. Confidence in property, so wobbly for several years previously, had thankfully been restored, much to the relief of many. Nobody could have anticipated what was to come next. I’ve experienced many challenges to keeping our auctions operating over the years – storms of biblical proportions, picketing by pressure groups, postal or transport strikes in the UK, angry protesters in Ireland, the threat of imminent closure due to overcrowding in both countries, even having to learn Spanish hastily to sell in Madrid. But nothing comes close to what we are now facing with the outbreak of Covid-19. The word “unprecedented” has never been more widely used. A theoretical question? Shortly after the success of our February sale, I was asked what we would do if coronavirus prohibited public gatherings at a ballroom auction. It seemed more of a theoretical question at the time. The virus was spreading beyond China but had not reached pandemic status. If we could not open the doors to the public, then live-streaming the auctioneers from the room would work. After all, we do that anyway. Bids could be made online, by phone or by proxy. We would still hold a multi-channel auction. We just wouldn’t have the fourth (and most popular) channel, namely physical bidding in the room. Interesting debate, but surely academic? And so we set to work building our 30 and 31 March commercial and residential catalogues. We went live with a 285-lot residential catalogue on Friday 13 March. Two days earlier, the World Health Organisation had declared coronavirus as a pandemic. We were not in lockdown at this point but the escalation of the crisis around the world was becoming ever more frightening. The only safe option The following weekend, the commercial and residential auction partners agreed that the safety of our buyers and colleagues was the primary driver in decision-making. That ruled out a closed-door physical sale. We could not expect our staff and partners to gather in a room with auctioneers to receive online, proxy and phone bids. An exclusively online auction was the only safe option. To allow more time to inform clients and buyers, the commercial sale was moved to 31 March and the residential sale to 2 and 3 April. Two days after we had agreed our strategy, the prime minister announced lockdown. Allsop has extensive experience of this method, having held multiple sales online in Ireland (following physical in-room protests) and three sales online in the UK. With all eyes now focused on three online auction days in one week, the big question was whether this would actually work in the most challenging of situations. The teams set about ensuring that all interested parties were given full guidance on the bidding process. Pre-registration is necessary for anti-money laundering purposes in any event. Allsop also required pre-payment of deposits and buyers’ fees before bidding status was approved. Purchase and sale contracts were modified to safeguard enforceability. Physical viewings were replaced with virtual tours and internal photographs. Lots with no bidder registrations were considered for withdrawal and re-marketing. Memoranda were signed electronically by Allsop on behalf of buyers and sellers to evidence the binding contracts formed on the fall of the virtual hammer. Successful result The results were better than expected. The commercial sale has so far raised more than £31m, with 78% of lots sold. The two-day residential sale stands at £29m, with 77% sold. A £60m receipt achieved through the collaboration of two experienced teams both working from home is hugely encouraging. Auctions are still working despite the stagnation now stifling the private treaty market. The government’s advice is not to move home unless it’s essential. Estate agency branches are closed. Zoopla reports that the number of new property sales agreed in the UK has fallen by 70%. Yet auctions have proved to be a method of transacting that will remain resilient in the online space. As an auctioneer, I will always prefer the atmosphere of the room and the excitement of public combat. I have no doubt that prices can be enhanced more effectively by a skilled auctioneer in a live environment. For the time being, though, online is a vitally important and highly efficient substitute. In the face of all the restrictions that we are currently facing, online auctions are likely to be the only truly functioning marketplace for trading commercial and residential property in the months ahead.