A new live online auction business being launched by Zoopla is set to turn the property portal business on its head.
Agents will not have to pay anything to list their properties: instead, Zoopla will pay them for listing properties that sell through the auction site. The cut to agents will be 0.25% of the total selling price.
Zoopla is launching its new service with American auction house REDC.
The first live sale starts on February 11 and there are already 76 properties listed – all repossessions.
Zoopla CEO Alex Chesterman said: “That will not be the case with our future sales.”
The number of properties offered at the first sale is expected to double, he added.
REDC caused a stir with its first foray into the UK last year, holding ‘real’ auctions where an enormous 10% buyer’s premium raised eyebrows.
In its new partnership with Zoopla, the buyer’s premium is 2%.
According to David Sandeman of the Essential Information Group, 99% of lots at property auction are sold without a buyer's premium, although auctioneers might charge the buyer an administration fee of somewhere between £150 and £750. Where buyers are charged a premium, it is usually 1.5%.
However, unlike salesroom auctions, sellers using Zoopla's auction service will not be charged an entry fee.
It is from this 2% that 0.25% will be paid to the listing agent. Chesterman emphasised that this would be on top of the agent’s normal commission.
Auctions will take place weekly, from Thursday lunchtime to Sunday evenings.
Over the next few weeks, automated functionality will be introduced to allow Zoopla agents to seamlessly put any of their properties into the auctions.
Chesterman said: “We see live online bidding as the future of property auctions. In the US, REDC now sell 50% of properties online – that is 12,500 homes a year, worth about $1bn, all sold through live online bidding.
“We also feel agents will welcome this venture because it gives them access to a new way to market properties. It also gives them the opportunity to speed up transaction times and receipt of their fees, as well as the chance to earn extra revenue.”
As with a salesroom auction, agents and sellers will agree a reserve price before the auction. Chesterman anticipates that agents will want to enter properties into auction three to four weeks in advance of each sale, to allow time for purchasers to contact the agent and arrange viewings and finance.
Buyers will have to exchange immediately after a winning bid and, as with a salesroom auction, winning bids are binding.
Chesterman said that private sellers will not be allowed to use the new service.
Greg Spiro, executive vice-president of REDC’s international division, said: “We are looking to create the largest online property marketplace in the UK, for buyers and sellers to transact openly and transparently.”