It appears that online property auctions have risen significantly in popularity since the outbreak of the COVID-19 pandemic. But is this really the case? And, as governments around the world continue to gradually ease restrictions further – will this pattern continue?
In this article, we explore the truth behind this revolution in property auctions and consider what the future is likely to hold.
In the first quarter of last year, it was reported that online auction sales at Sotheby’s, Christie’s, and Phillips – the three top auction houses worldwide – had surged by a staggering 524%.
This, of course, was due in great part to strict national lockdowns that had been implemented on and off around the world on multiple occasions by the time this statistic began to be shared.
There is no doubt, then, that online auctions – whether for art, antiques, property, or anything else – have risen significantly in popularity.
Why Do Online Property Auctions Continue to be Popular?
This is likely due to a number of reasons, including:
- Physical safety. The potential spread of COVID-19 is still taken very seriously, and, where there is an option to undertake certain tasks from home, it seems highly likely that many people will take it.
- Greater confidence. An in-person auction can be overwhelming and intimidating for first-timers – whether this is because of the presence of other bidders, uncertainty around etiquette, or a general fear of the unknown. Partaking online often feels more relaxed.
- Many online auction houses have strict requirements in place and undertake in-depth background, identity, and money-laundering checks. When searching for an auction site, buyers can check the security standards of each before bidding.
- Online auctions are far easier for individuals with additional access requirements. What’s more, many online property auctions welcome mortgage buyers – something that is rarely the case with traditional auction houses.
- A larger bidding window. Many online auctions keep bidding open for many hours – and some permit sellers to keep accepting bids for up to 30 days!
- Budget-friendliness. It costs nothing to attend an auction from home. What’s more, some lots may be pushed up in price following a bidding war. Others will sell for below market value – something that is very desirable with today’s elevated house prices.
Sellers of property may also benefit, as more potential buyers can attend an online auction. This means that prices are likely to be pushed up higher.
What’s more, the ability to list a property for a longer period of time – often a period of your choice – means the price is likely to climb even higher as more and more house hunters come across it.
Online Auction Pitfalls
Of course, online auctions do have their downsides. These include:
- High numbers of bidders push prices beyond sensible levels, making lots inaccessible for buyers on a budget.
- The potential for anonymity can increase the possibility of identity theft and fraud without careful management.
- An extended waiting period for both buyers and sellers, as most online auctions take a great deal longer to conclude than their traditional counterparts.
- The remaining need to see a lot “in person”. When it comes to property, in particular, it is highly recommended that all potential buyers should attend an “in-person” viewing before placing a bid. This gives them a chance to check for structural issues and other problems.
This is one way in which online auctions do not increase the ease with which a sale can be made.
The Future of Online Property Auctions vs Traditional Auction Houses
There appears to be no sign of a return to our previous way of bidding on property according to the Online Only Auction Review – the study by RawFacts which uncovered the aforementioned statistic.
After all, the sheer level of popularity commanded by online auctions in terms of attendance and the volume of lots sold suggests that this approach is working – and will continue to work as long as it is available.
It is worth noting that certain properties still sell more effectively at traditional auctions than online.
Often, newer, more “typical” residential properties are most popular via online auctions. On the other hand, property for renovation – or more unique buildings – performs better at traditional auction houses.
However, it is difficult to predict what the future may bring in terms of trends and new angles for online auctions. There may well be changes in store. These include new ways to sell and an increased online interest in different types of property.
The best approach for those who are new to online auctions is to start small and build a little experience in online bidding before considering bigger ticket items like property.
Otherwise, you may choose to seek the guidance of a more experienced acquaintance who may let you watch the process.
If you think you may attend numerous online auctions in the future it is definitely worth keeping your eye on up-and-coming trends to see how their newfound popularity may change and develop.