Estate agents turn to online auctions

Regional auctioneer SDL Auctions has seen further growth in demand for auction services from estate agents with 500 branches now partnering with the firm, as the UK private treaty market grapples with faltering transaction levels. SDL launched its SDL Auctions Partners business in February 2017 and has sold just over 500 properties on behalf of estate agent partners since then. “We are on plan to sell 50 properties this month through our partner network,” said Louise Jefferies, director of business development.  Flawed private treaty market “It’s tough out there for estate agents. They are at the mercy of a flawed private treaty process where there are no consequences to buyer or sellers if they pull out. That, coupled with apathy from a challenged and in some cases unresponsive legal profession, means that often the estate agents do a shed load of work with no promise of income at the end.” The most up-to-date HM Land Registry sales figures available for England show that the number of completed house sales in England fell by 16.1% to 58,073 in May compared with 69,176 in May 2017. Average UK house prices increased by 3.1% in the year to July, the lowest annual rate seen since August 2013 when it was 3%, according to the latest UK House Price Index from the ONS and Land Registry. The bulk of sales through SDL’s partner network are online through auctions marketed under the estate agents’ own branding on either a conditional or unconditional basis. For conditional sales, SDL takes a 4% non-refundable deposit from the successful bidder, who then has 56 days to complete. Less than 1% of conditional sales fall through.  Fees are paid by the buyer – making the process free to the vendor – and are split 50/50 between SDL and the estate agent partner. They are typically a minimum of £2,500 or 2% of the sale price.  Not for everyone “We make it very clear this way of selling your property is not for everyone,” Jefferies said. “There has to be a motivated and realistic vendor that understands it’s not like private treaty when you work down from a price to what the vendor will accept. We start as low as they can go in the aim to generate competitive bidding and more interest in a tighter time scale.” The rapid growth of the business, which now counts London specialist Chestertons among its partners, still leaves it some way behind the leading player in this field, however, with outsourced auction provider IAM Sold now working with 1,900 estate agency branches. It helped clients to sell almost 3,000 properties in 2017. Some agents are also choosing to work with online auction platforms directly (see panel). Online auction technology made from Bamboo Bamboo Auctions, which provides white-labelled online auction technology to agents and auctioneers, has signed exclusive partnerships with Hunters Estate Agents and Fisher German. This means Bamboo will be providing more than 250 agency branches with access to their own branded online auction platform. Hunters, which has switched from a competing provider, will use Bamboo Auctions’ technology to power all online auctions across its 200-strong franchise network. This follows an exclusive partnership signed earlier this year with 16-branch Fisher German. Both firms have now sold their first few properties online. Stuart Flint, partner in charge of transactional business at Fisher German, said: “Online auctions offer numerous advantages for us and our clients and, given the transparency of the process and the high level of visibility, I foresee huge growth in this method of sale.  “We believe that an agent’s good reputation is one of the cornerstones to their success. There is no substitute for a handshake in this industry “The system allows our private clients to enter appropriate lots all year round, alleviating the need to wait for an appropriate collective auction, but it is perhaps our corporate clients and other institutions we act for who may see the greatest benefit. These clients in particular will see the advantages of this open pathway to sale and probably the ultimate test of market value attainment.” Robin Rathore, chief executive of Bamboo Auctions, said that one of the key attractions of using the platform was that is does not disrupt the agent’s relationship with their vendor.  “We believe that an agent’s good reputation is one of the cornerstones to their success. There is no substitute for a handshake in this industry and we recognise that. Instead, we provide the technology, support and know-how to make agents’ jobs more efficient,” he said. To send feedback, e-mail julia.cahill@egi.co.uk or tweet @EGJuliaC or @estatesgazette