Auctions: COVID-19 brings on a different buying experience

13 May 2020

By Cath Dickinson

After a six-week hiatus, the easing of COVID-19 restrictions saw the first on-site auctions go ahead on Saturday, 9 May 2020. We spoke to two leading auctioneers about how auctions have changed and what the future looks like.

Not surprisingly, when auction restrictions were first implemented at the end of March 2020 the inevitable result was a marked drop-in auction activity.

“For the most part, agents stopped listing properties for auction,” Ricky Briggs, Chief Auctioneer and Director at Advantage Auctions and Deputy Chair of the REINSW Auctioneers Chapter Committee, said. “But now, with the easing of restrictions, I believe we’ll see stock that was being held back come to market and auction activity start to lift.

“While the next four to six weeks may be a little slow as properties make their way through the campaign cycle, there are positive signs that we’ll begin to see some healthier numbers through June and July.”

Jesse Davidson, Chief Auctioneer and Director at auctionWORKS and Chair of the REINSW Auctioneers Chapter Committee, agreed.

“While the colder weather traditionally sees a slowdown in the market, this Winter may be a little different,” he said. “Enquiry and inspection numbers are down. However, those purchasers who are out and about are serious about buying. They’ve been biding their time and doing their research while in isolation over the last couple of months and now they’re ready to move.

“Even though there are fewer purchasers active in the market, all of them are strong. They want to buy and they don’t want to wait. This is really encouraging.”

Technology solutions at hand

While the COVID-19 restrictions have certainly presented challenges, auctions have still been able to proceed, though in a very different way.

“Had the pandemic hit us five years ago, the initial restrictions would likely have brought auction activity to a halt,” Ricky said.

“Today, however, the industry is in the fortunate position of having a range of technology solutions available to facilitate the auction process. We can register bidders, livestream auctions, receive bids, exchange contracts and take deposits in an online environment. The process is seamless and allows for the smooth transaction of property.

“Some of these solutions have been available for a while and there has been some uptake by the industry. However, this uptake has definitely accelerated because of COVID-19.

“The positive takeaway is that we’ve been able to adapt quickly and show our clients that, while there are restrictions in place, we can still sell by auction and give them the security and finality they’re seeking from the sale.”

Jesse also welcomed the use of these technology solutions in the auction space, but emphasised that the auctioneer is still central to the ultimate success of the transaction.

“In the current operating environment, technology and the auctioneer need to work together, because an online solution will never be able to do the same job as we do,” he said. “There’s definitely a place for this technology in the industry, particularly given the restrictions we’ve had to operate under in recent times. However, there’s no substitute for personal interaction during an auction, because an auctioneer can read the crowd and influence the bidding process.

“Both the auctioneer and the sales agent play an essential role in encouraging bidding through interaction with bidders, thereby achieving the best possible result for the vendor.”

Auctions the same, but different

Ricky noted that while some of the COVID-19 restrictions have been eased, it’s certainly not business as usual.

“Even though on-site auctions can now go ahead, there will still be those bidders who are unable or don’t want to attend an auction in person,” he said. “In these cases, it’s preferable to register them to bid via telephone, so there is an opportunity to interact with them personally. They can then watch the auction via livestreaming, so they can see what’s happening in real time.”

Jesse pointed out that, for the foreseeable future, auctions will certainly not be the open events they have been in the past.

“Times have changed and it’s not a case of ‘come one, come all’,” he said. “Auctions are now essentially private events and registration is the ticket to entry. On-site auctions can’t be a neighbourhood event, with people from down the road popping in to have a sticky-beak or non-bidders attending to do their market research.

“This will be disappointing for some people, however it’s simply a case of explaining to them that, given the current circumstances with COVID-19, the auction is only open to registered bidders. If someone is particularly interested in the outcome, offer them the opportunity to watch the livestream or contact them afterwards to communicate the result.”

Ricky added that due to social distancing requirements, rather than holding auctions inside the property, they’re more likely to be held out in front.

“This means that there’s certainly the potential for people who aren’t registered bidders to pop by,” he said. “We can’t stop them from standing on the footpath or in the street to watch the auction. But what we can do is cordon off an area and only admit registered bidders to that area.

“When it comes to inspections prior to auction, a good approach is to limit the timeframe to 15 minutes prior to commencement. It’s also good practice to only allow registered bidders to inspect the property at this time, stagger their entry and advise them not to touch doors, handles, railings, surfaces etc.”

On a final note, Jesse said the key message is a positive one.

“While we’ve had to adapt to changing circumstances, the important thing is to remain positive and have confidence in the auction process,” he said. “Whether the auction is on-site and in person, or via an online platform, the competitive element remains and the process is transparent.

“Auction is still the best way to sell property.”

 

REINSW has compiled a best practice checklist for conducting auctions under the current COVID-19 restrictions. You can access the checklist by clicking here >>>

Want more?