Online Property Auctions - another useful sales tool?

Online auctions have been popular for quite some time.

But selling real estate through online auctions leaves many real estate professionals with mixed feelings. Unless there is little choice in the method of sale, of course!

Achieving property sales in the middle of the coronavirus was, indeed, one of the occasions where we felt we had little choice if we wanted to keep selling homes! Restrictions on gatherings at open homes, doing private inspections or attending regular onsite auctions meant we needed to be creative and innovative and, so, we turned to arranging online auctions.

Our first online auction

The first auction we held in the middle of the pandemic presented lots of challenges and it was a learning curve for us all. For a start, it was held on a Saturday – arguably not the right day. Time doesn’t matter so much when you are online and in a “virtual” situation but that special feeling associated with the traditional onsite “Saturday auction” was lost.

Maybe we also missed the buzz that emanates from the prospective bidders and auctioneering team that accompanies on onsite auctions, but that's something which, with practice, can be partly overcome by the skill of the auctioneer.

Furthermore, some of the 14 potential bidders were not, initially, sure about the processes and more time was needed to help buyers work through the registration and subsequent bidding processes.

In any event, the auction went reasonably well after a slow start, the sale moved into a private treaty negotiation and the property was sold shortly afterwards for the reserve price.

Holding this auction online certainly ensured a timeframe was adhered to, but it was in the middle of the pandemic and the market was very uncertain, so there were some nerves about. Nonetheless, the result proved that online auctions could work, and we also gained a clearer idea of what needed to be done to improve for the next time.

So, we tried again

As we took on board what we had learned from our first online auction, the strategy for our second auction was easier to work out, especially the pace of the auction itself. Although this particular property was ideally suited to an onsite auction, in view of the continuing uncertainties about the duration of the pandemic, we agreed to try and sell it at an online auction.

We were all keen for such an auction because we wanted a timeframe on the negotiations and only to consider cash (unconditional) contracts. We chose early afternoon on a business day as the time and, again, used our boardroom as the base for the administration.

The auction itself took over an hour and had 28 people watching. The pace seemed glacial, as the negotiations continued into the next day but, in fact, we did end up achieving a higher price. The longer negotiations also gave us time to occasionally check with other potential buyers too.

All the processes of a typical auction were followed. These included calling “..at the third call of the hammer..” to confirm that any underbidders were no longer likely to bid.

This second auction went even better than the first and we picked up some additional ideas in case we ever decide to (or have to) do online auctions again.

Would we do online auctions again?

I’m happy to share our experiences and am interested to receive feedback from others who may have had similar, or different, experiences with online auctions.

In summary, I do think there is a place for online auctions in our “sales toolkit” when we offer our services to sellers. Clients can expect experienced agents, working in teams, to be able to handle online auctions professionally.

Selling real estate is often a stressful, exciting time for sellers and we know from feedback received that our vendors appreciated what we did for them and how we managed these online sales.