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Welcome to "Auction Week" - all this week - on Property Tribes. We're joining with Bamboo Auctions to bring you a week of content around buying and selling property at auction.To celebrate the start of “Auctions Week”, we thought we’d set the scene with a brief history of auctions, and our take on where the future of auctions is headed.
Auctions are one of the oldest methods of sale. In fact they go back as far as the Babylonians. The Romans used auctions as a means to dispose of the “spoils of war”, which incidentally included prisoners of war, who were sold as slaves.
With the demise of the Roman empire, auctions fell out of use and it was only in the 1600s did it start to make a revival as a method of sale. Samuel Pepys wrote in his diaries about a sale by candle, where the highest bid when the candle flame went out would be the winning bid. As no-one knew when the candle would go out, there could not be any last minute sniping.
Auctions really became prominent in the sale of art and chattels. Indeed Stockholms Auktionsverk is the oldest auction house in the world, founded in 1674 and specialising in precisely these types of goods. Stockholms Auktionsverk incidentally now sells a huge amount of its stock in online auctions.
For reasons unbeknownst to us, the oldest 3 auction houses are all in Sweden. The first auction house to open in England was Sothebys in 1744, followed by Christies in 1766. These auction houses continued to deal in chattels (i.e. not real estate).
Allsop is the oldest auction house specialising in the sale of real estate in England and Wales (that we know of). The fact that it was established in 1906 is perhaps no coincidence. The US economy was in turmoil around that time, in part due to the fact that its money markets were linked to agricultural harvests; this natural instability and uncertainty exacerbated by reactionary interest rate rises to attract money back into the US. An earthquake in San Francisco and subsequent interest rate hikes in the UK led to UK stock market crashes of some 20%. As we know, property is a good bet in periods of uncertainty.
The Auctioneers Act 1845 was the first in a series of acts of Parliament that provide for a legal framework for the auctions industry. Indeed, section 7 of that Act remains in force (requirement for the auctioneer to make clear details of their name and address for all consumers during the auction itself — failure to do so is a fine of £20).
From there, property auctions have been regulated by statute, case law and trade bodies including the Royal Institute of Chartered Surveyors and the National Association of Valuers and Auctioneers. If you ask any auctioneer, they will certainly regard their profession as exactly that — a profession.
The future of auctioneering
Auctions have traditionally been the forum for distressed stock and bargain buys. This is becoming less the case.According the the Allsop Residential Auction Review in 2015, the percentage of distressed stock featured at auction was the same as that of stock from private vendors (around 25% each).More and more vendors are realising that auctions are not a place to grab a bargain, but actually a place to buy and sell property in an efficient manner.Exchange occurs immediately, so there is less faffing around and greater certainty in the transaction. What’s more, because the job of the auctioneer is to attract many bidders, who compete for the property — thus driving the price of the property upwards (auctions actually come from the Latin “augeo” meaning “I increase&rdquo, sellers could actually end up with more than they had hoped for.
As with many industries, technology is changing the way that auctions are conducted. More and more auction houses are operating online auctions — where properties are offered online, buyers can bid at their convenience and exchange occurs immediately at the end of the seller’s chosen time period.Alongside this, virtual and augmented reality are playing a greater role in viewings and development of property. These innovations are designed to bring greater access and transparency to the auction process, as well as attracting more sellers to auction.
Most auction houses who deal in art, antiques and other chattels have already embraced the online auction process, with several of them moving exclusively online.
Bamboo Auctions provides technology to auctioneers across England and Wales, that allows them to operate an online auction.Once registered, buyers can search, download legal documents, arrange site viewings and place bids on properties online. Sellers have greater control and can choose when their auction occurs, as well as setting their reserve price. Exchange occurs online, immediately at the end of the auction timer.
Auction houses already using the Bamboo auctions platform include Clive Emson Auctioneers, SDL Bigwood, SDL Graham Penny, Loveitts, The Property People (who operate All Wales Auctions), Phillip Arnold Auctions, MS Auctions, Nesbits and others.A typical investment property for sale via Bamboo Auctions platform:Semi detached house for investment in Rotherham, S65 3NXOpening bid: £58,000
Tenanted on an Assured Shorthold Tenancy Agreement at a current rental of £6,325.72 per annum, giving a gross rental yield in excess of 10%.Visit listingWe’d love to hear about your experiences (good or bad) and your thoughts on where you see the future of auctions and the property sector as a whole.
Don’t forget, Bamboo Auction are offering all PTers the chance to sell their property at auction with no entry fees — get in touch with them here.DON'T MISS - 6 ways of selling an investment propertyUP NEXT - Legal packs at auction - what to look out for?SEE ALSO - Bridging case study: Buying a property before it hits the auction room.RESOURCE - Guide to buying a property at auction - Auction packsNOW WATCH: *In the interests of transparency, Bamboo Auctions are a commercial partner of Property Tribes and their support helps maintain this site as a free to use community resource.
Is the anagram of "auction" still "caution"?
Yes, but education about auctions helps mitigate risk and that is the purpose of this week of content.
I wouldn't call it 'an evolution of auctions' but more like a trip down an auctions cul-de-sac.
I don't see this as an evolution at all.
Check me out at: http://www.LordLucan.com
Have you used an on-line bidding system then? I expect you have used Ebay. It's no different. Technology is the way forwards, of that there is no doubt.
We seek to educate and help people embrace change. Bamboo is a young platform and gradually getting traction in the market place. That takes time. No one is forcing you to use our sponsors' or our own products, services, or suggestions but if you want to remain in the analogue world, then that's up to you.
Thank you for your comments LL. We've addressed your points directly below, which I hope you will find useful.
1. We don't believe that sensing a mood and seeing the whites of a competing bidder's eyes makes a room auction more transparent. With an online auction, we have clear paper trails of who has bid, when and what time. We carry out anti money laundering checks on all buyers and have records of these checks as required under regulations and the Joint Money Laundering Steering Group. Payments that are taken are done so with PCI Level 1 compliance. Bids can been seen on the site and a "reserve met" indicator is present so you know the property will sell.
Incidentally a lot of fine art has been transacted by online auction for several years now, much of which is worth a lot more than real estate.
2. An online auction provides an extra avenue for you to purchase properties. You might like 5 properties in a room and not purchase any of them. If you also like 2 online, you'll have an opportunity to bid for those as well when the room is not happening.
3. "Games" or "bidding tactics" are often used in live room auctions as well, e.g. waiting until the end of the auction to bid, or jumping the auctioneer's increments to put off a competing bidder. Placing a bid with 5mins and 60 secs to go, does give an underbidder 5 minutes to bid again and of course we'll notify that underbidder when they have been outbid. The fact that when a bid placed in the last 5 minutes extends the timer by 15 minutes, means that a vendor is likely to get market value as there is an opportunity for more bids to be placed until the market is exhausted.
4. We have just signed Clive Emson Auctioneers, SDL Bigwood and SDL Graham Penny in the last 2 weeks or so. They join Loveitts, The Property People (All Wales Auctions), Shonki Bros, Phillip Arnold Auctions and many more auction houses. We're expecting more and more properties online as we grow. Watch this space - Rome wasn't built in a day
5. Buyer fees are set to allow for the auctioneer to retain their buyer fee that is usually charged. The fee is fixed and not a percentage to allow for greater certainty and clarity and part of the fee goes towards the purchase price.
6. We are working with 2 of the largest 5 auction houses in the country. Allsop currently operate an online auction as well. All properties are marketed on the portals as usual as well as being marketed to large databases held by our customers.
7. Fairly soon, all buyers will have to register before they enter the live room. This is partly to satisfy new money laundering requirements that will be coming in. Many auctioneers already operate a registration process. The registration process on Bamboo is very quick - it takes 30 seconds to register and around 2-3 minutes to complete the form and pass your anti money laundering check. The bidding process is done in one place, on the site and takes 2-3 minutes as well. As all properties online have a timer and countdown period, interested bidders will already know about the property and will have considered their bid in advance.
In short, we are not trying to recreate the room auction, online. The online auction is an entirely different method of sale and will appeal to different vendors and buyers. For that reason, the psychology involved with an online auction bidder is different to a live room bid. There may be more adrenaline in the live room auction, but not everyone wants their property purchase to be adrenaline fuelled.
We're also identifying new markets. The vast majority of buyers in a live room are men. On our site, 30% of our registered users are women - a number that is growing month on month. We are opening up auctions to more consumers, in partnership with reputable, trusted and traditional auction houses, which we think can only be a good thing for the market as a whole.
Bamboo Auctions0330 088 9659
One Euston Square | 40 Melton Street | NW1 2FD
Sell your property by online auction