Property auctions are fast becoming a popular method of buying and selling properties. This is down to the speed of sale, potential bargain prices and the security they offer compared to a private treaty.
Alongside traditional auctions, there has been a trend in recent years towards online auctions, which has accelerated even further due to the coronavirus pandemic. As a result of Covid, all property auctions are currently being held online – although some of these online auctions are known as traditional online auctions, in that they closely replicate the in-person experience, with an auctioneer dictating proceedings and a set time-frame, just done virtually.
Post-Covid, there is likely to be space for both auction types, but what are the advantages and disadvantages of each type of auction?
Otherwise known as live auctions, this has for centuries been the conventional way an auction is held, and is exactly what you would expect: auctioneers speeding through items, gavels, bidders holding up paddles, etc.
Traditional auctions take place in a physical location at a specified time and usually last for a few hours, depending on the length of bidding.
Bidders must attend the auction in person or have a representative present in order to participate, and exchange of contracts typically happens immediately, with many purchases made in cash.
Live auctions benefit from the human factor. Buyers are able to see the property before committing to a purchase, while sellers can also talk to any prospective buyers.
Sales are also completed much quicker – usually on the day of the auction – which is a major draw for those wishing to achieve a speedy transaction. What’s more, live auctions hold the charm and nostalgia that is lacking in an online setting.
Buyers can get caught up in the hype of the moment, leading to rising stakes among bidders. This presents a huge advantage for sellers to make more profit from their properties.
And, as live auctions require the buyer to be there to purchase the property, this takes the unlimited competition aspect away when compared to the online world, meaning bidders are more likely to acquire their desired property.
Online auctions follow the same basic principles as traditional auctions, but with added flexibility.
The timeframe is also much longer as bidders can bid over several days, weeks or even months from the comfort of their own home or office.
An online auction is exactly what it says on the tin: buyers and sellers can participate from anywhere as long as they have a solid internet connection. This brings convenience, a large market and a smaller time commitment to auction participants.
Once a bid is accepted by the seller, sales are completed within 28 days in an unconditional auction but can take longer to process if it is a conditional auction.
With exchanges happening on the fall of the virtual hammer, the online method is convenient. The elimination of costs associated with holding a traditional auction means that it is also less expensive for sellers.
In fact, sellers are able to invite anyone to attend the online auctions, bringing in even more buyers which can raise the bidding prices. Buyers, meanwhile, have a variety of options and can still contact sellers or the auctioneering platform with any questions.
However, the main downside is the lack of face-to-face interactions. Online support cannot replace seeing something with your own eyes and talking to a buyer in person.
Lastly, properties being bid on tend to be more expensive than at a traditional auction. With everyone online having access to the sale, there is the potential for more bids to compete against yours.
As we can see, each auction method has its draws and obstacles, but for the moment Covid-19 is making traditional in-person auctions unviable, something which may remain the case for quite some time.
That said, auction houses across the UK have adapted to the new normal in a seamless way – and many have experienced more success than ever with a variety of auction types on offer.
This includes the aforementioned traditional online auctions, as well as online auctions, Modern Method of Auction and Sell Now facilities.