Never has a phrase been more true, or more relevant, than when applied to the world of property auctions.
Having worked in this profession for over 15 years, we know that the general public’s (and many fellow property professionals) perception of what an auction is, is often very different to the reality.
I’m a big supporter of the Homes Under the Hammer television show, and they were regulars at an auction house I used to work for. But – and this is just in my humble opinion – it is the best and worst thing to happen to our profession in the past 10-15 years.
On the one hand, it has helped raise awareness of property auctions and shone light on the process making it more accessible to those watching on their TV screens and confirming that it is in fact, less scary and not as high risk as most first think.
However, a scripted TV show which follows the journey of buyers from making the bid through to navigating a renovation project which will hopefully reap profit when they sell the property is not the reality of what many will experience. While buying perceived ‘cheap’, or ‘fixer-upper’ properties for profit is a great message for buyers (and TV figures), it’s not so helpful when you are considering selling by auction.
Because the reality is that while these so-called investment properties are a great buy, they are not the only homes available at auction. Auctions are a great way to sell any property for a number of reasons. The speed of the transaction is appealing to many with the buyers entering into contract the moment the gavel falls. With this comes the certainty that the property transaction will go through as the deposit is paid at this point. Most properties we sell at auction complete withing 4-6 weeks of the auction date. Finally, auctions come with a level of transparency that often drive a property price higher than it might achieve through final offers as buyers can see where the offer is at in real time.
The outdated and inaccurate perception that auctions are only for fixer-uppers is one that auctioneers fight to overcome on a regular basis. Where non-auctioneers, when asked, “have you dealt with auctions in the past?” simply reply “no, but I’ve watched Homes Under the Hammer” – this may be true, but I’m confident you would decline my help if you needed an operation because I watched Casualty when I was growing up!
In a recent LinkedIn poll, we asked respondents what percentage of all UK properties they believe are sold via auction. The results were not surprising.
32% said that sales through auction accounted for 10% of all property sales
25% said that sales through auction accounted for 15% of all property sales
25% said that sales through auction accounted for 3% of all property sales
18% said that sales through auction accounted for 5% of all property sales
The correct answer is 3%. And surprisingly, even though there has been an increase in sales by auction over the past 12-18 months, it has rarely been higher than 3% of all property transactions in the UK for over 20 years.
So why is it that 75% of people asked believe auctions represent 5-15% of the property market by way of sales. This is because of the perception of auctions and likely this has been helped by the TV shows like, Homes Under the Hammer.
We had a saying when I worked in the auction department of a multi-disciplined estate agency in Wiltshire that “auctions are 10% income and 90% profile” and I think this is an accurate portrayal of the auction world.
The larger question at hand is do we really believe that 97% of all properties sold in the UK should be sold in the same, traditional open market way via estate agents where it can take almost three times as long from the first day of marketing to legal completion than selling by auction and has an average fall-through rate of around 35% compared with less than 1% via auction?
At My Auction, we’re working really hard to improve the perception of property auctions, championing the positives and guiding our clients through the process every step of the way. As the popularity of auctions starts to increase, I believe we are entering into one of the largest shake ups of the property buying and selling process in the UK in my generation. We won’t change the perception over night, but one lot at a time we hope to highlight the many benefits property auctions come with. And if you still don’t believe us, check out our latest listing. This beautiful Lodge House located just outside of Bath speaks for itself.