The value of auction in a seller shortage market.
During a period of uncertainty and extended completion timelines, auction is providing agents with a compelling alternative that comes with speed, security and best results for vendors as standard. Last year, iamsold sold over 3,894 properties and delivered £12.2m in fees to Partner Agents and with 7 days payment terms available, it provided a secure and predictable cash flow, for our agents, when they needed it most.
With fewer properties on the market being quickly snapped up by eager buyers, short on options, it’s no surprise that many agents are reverting to more traditional sales methods for agreeing a quick sale. But many are not taking advantage of the opportunity and benefits auction can provide in the current market environment: transparency, competitive bidding, speed and security.
Popular properties drive overwhelming requests for viewings and offers. Negotiations can quickly start ramping up and it can soon become a case of best and final offers. But, whilst this might end up providing a satisfactory result, a quick sale for the seller and less negotiation to manage, there remains the downstream prospect of a 1/3 chance of a fall-through and a shocking completion timescale of over 126 days. Something many sellers are unaware of from the outset.
Private Treaty is an opaque process and can lead to negative experiences with unsuccessful buyers often left disappointed or worst case, annoyed that they have lost out on their dream property. 2/3 of consumers think transparency is important* in home buying and selling, with 70% thinking the process of buying and selling homes in the UK needs to change.
Auction provides transparency to the process by allowing all potential offers to be visible to all parties. In instances where there is significant interest, this can often lead to a flurry of competitive bidding, driving up the sale price and ending in an even better result for the seller; and with an average fee of 2.3% it can prove more lucrative for you than a Private Treaty sale, with the additional benefit of sale progression being managed by iamsold.
49% of consumers said they would consider Modern Method of Auction if they understood it better, and whilst auction won’t always be appropriate for a vendor’s circumstances; if they need to move quickly or are looking for more security and protection from a fall-through, it is certainly worth a conversation. 95% of Modern Method of auction sales go through to complete, with a fixed timescale of 56 days from draft contract vs. the average of over 126 days via Private Treaty with a 1/3 risk of fall-through. When taking all these factors into account, it’s certainly worthy of a higher level of consideration as a core method of sale in this buoyant market.
Jamie Cooke, Managing Director of iamsold encourages agents to help their clients’ consider all the options; “With stock tight and buyers lining up, there must be a consideration in this market, for agents to think auction first, to ensure the best price for their client, whilst taking advantage of the speed and security auction can offer to overcome many of the challenges of Private Treaty – we owe it to vendors to give them all the options, something highlighted by the current TPO guidelines”.
A recent example saw auction initially pitched at valuation for a coastal property in Camber, but the vendors decided to list via Private Treaty for £325k which resulted in lots of interest and multiple offers in the first week. They were re-approached with the suggestion of auction, with security being a key benefit and helpful to their circumstance as they had found a property they liked and needed to move more quickly. They agreed to list at auction and were not disappointed with the result!
Examples like this really show how much value auction can deliver for all types of properties and specifically, popular ones – a great financial result for the vendor, and the agent with speed, security and transparency – what’s not to like?
Auction has really changed in recent years, and Modern Method of Auction has demonstrated it can work in all market conditions, delivering great results to vendors and agents. It might be time to re-think when and how you leverage it, to help you win more listings. The promise of a competitive environment to get the best results for your clients, coupled with speed and security, can be a compelling sell to help you stand out from the competition.
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