When talking about real estate, it seems natural to immediately envisage houses and lawns, perhaps even making a mental note of possible viewing days with prospective clients. But in the wake of COVID-19 drastically changing the way most industries run, real estate too has had to adapt - and adapt fast.
In the bizarre way that 2020 has seen brand CEOs and college kids alike use platforms like Zoom in an effort to resume life as they know it, the real estate sector has also been adopting digital and tech solutions to bridge the gap between buyers and sellers. One of those solutions has been online auctions.
Online Auctions – How they have worked in the past
First of all, they’re not entirely new. Online auctions were held in previous years, and, contrary to popular belief, did not only consist of foreclosures, but included short sales, bank-owned and flipped homes. Interested parties have a chance to inspect detailed 360-view ‘walk-throughs’ of virtual property listings right from their phones, but, once signed up and verified, can also buy.
Benefits to the Seller
- Allows sellers to launch concentrated marketing strategies to a wide audience that is already interested and pre-qualified, and (usually) ready to buy
- Such audiences are not only larger in scope but are also spread across a wider geographical, international net for sellers
- Eliminates unscheduled and fruitless, numerous home visits
- Transaction point is actually reached sooner than traditional routes, because of readiness and intent on all sides
- Limited time frames for bidding can also increase competition among buyers, so prices can actually exceed seller’s expectation
Online Auctions in the Era of Coronavirus
Recently however, more and more real estate players in several countries are dabbling with online auctions with interesting results. Australia, for example, started restricting traditional public auction gatherings in March, but some embraced its online alternative quickly. ‘Live-stream’ auctions were held on Auction Now, GAVL, Zoom, and even Facebook Live. One of the country’s lead agencies, Ray White ended up making a remarkable sale - the former German consul-general building in Woollahra for $10.78 million.
In the UK, Barnard Marcus’ first online auction in April yielded £9m, with a success rate of 61%. Key differences from other online auctions were that bidders were permitted to bid on any lot, as many as they wanted - without paying a deposit upfront. Despite government restrictions and fears that people might not be receptive to this new setup, it’s clear that something about the net being cast far wider than in a sole conference room or onsite at the property - and the ability to see a virtual bidding window in real-time - is working. Barnard Marcus also went on to hold future auctions online after the success of the first one.
Online auction process is here to stay - and what it means for agents
As consumers demand more digital options, it’s no wonder then that proptech bidding companies like Openn Negotiation in Australia and Venbona which serves Switzerland, Austria and Germany, are popping up all over the place in order to provide clients with a method that is not only secure, but transparent - a quality that is of great importance to audiences today.
Agents who are able to reconcile with the unstoppable emergence of proptech companies will find new and exciting ways to adopt new tech solutions in their skillset. For example, Angie Zingel, the co-founder of Propfi., a New-Zealand based online auction proptech startup, says “agents themselves use the platform” by giving them the tools to “...set the reserve, change bidding increments, [and] conduct auction to get the best price for the vendor”. The startup has made successful sales, but perhaps most revealing about the future of proptech and e-auctions is that Zingel also says the company was brought together by a “collaborative approach” - between government officials, lawyers and actual real estate agents.
It is clear that buyers and sellers are becoming more comfortable or at least willing to try new methods of this online process, and doing so through vetted and authorised sites indeed leads to increased buyer reach and engagement. For the agent who embraces the reality that the industry is changing swiftly, emerging tech solutions can give them opportunity to develop their own market niche, actually increase revenue streams and market share, (for example, some agents are earning additional commission as referring agent/brokers by directing sellers to best-fit auction companies, etc) - all of which signals a promising future in a real estate landscape that is rapidly changing in a post-pandemic era.
For more ways to adopt digital-first solutions, see this blog, published back in February.