INTEREST
Auctions paving the way in the market
John Abbott, Real Estate Sales Coach and Auctioneer
The past twelve months have seen significantly more properties being marketed for sale by auction. This trend has occurred right across the country, including in areas where agents have historically been reluctant to embrace this method of sale.
So why are we seeing an uplift in the number of properties sold by auction? The number one driver is, of course, the lack of supply and increased buyer demand. There are regular reports of auctions attracting more than ten bidders and clearance rates between 80% to 90%. COVID-19 restrictions also contribute to the proliferation of auctions as we shifted from in-person to online auctions, which have been remarkably successful. Anecdotally, some agencies are considering moving all future auctions online — even after restrictions are fully lifted, noting that many buyers are more relaxed when bidding from their own home, and the dynamics are different when in a user-friendly environment. Online auctions have quickly gained popularity and have become commonplace amongst buyers. People don’t need to wait around for hours until their auction commences; rather parties can bid from the comfort of their homes. The interaction between the auctioneer and bidders is relaxed, salespeople can assist the bidders if they wish, and it is easy for the auctioneer to consult the owners mid-auction if required.
Can technology replace the auctioneer? Online auction sites have already taken over other ways of selling — Trade Me
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The Real Estate Institute of New Zealand
as the hub of selling household items, or Facebook Marketplace, are just some examples. These platforms have become the norm when selling such items online, and it’s easy to imagine that this could soon be much the same with properties. However, I’m not convinced that will happen with higher-priced offerings such as fine art, bloodstock, and real estate, just yet. There is too much emotion tied up in these highly valued items. This is where an auctioneer can bring a wide range of skills, extending far beyond simply adding numbers together. They can manage and read human interactions and the expectations of parties involved, which are crucial skills that enable auctioneers to achieve greater results than what technology, at this point, can accomplish.
Advantages of auctions in the current market A significant advantage of an auction in a market where prices are rapidly increasing is that there is little risk of underselling. Potential purchasers suffer from a fear of missing out and will often exceed their predetermined limit to avoid having to pay more for the next property. When the market changes, as it may well be doing in 2022, the preferred option for vendors should be to sell by auction. In changing markets where the number of bidders at auctions reduces,
