The Modern Method of Auction (MMoA), also known as Conditional auction, can sometimes get a bad rap. However, much of the negativity around this method of buying and selling is often fuelled by lack of awareness, understanding and perpetuated by the misconceptions that exist about property auctions.
From our perspective, we’ve experienced our best year to date, and we’re on the cusp of counting 4,000 Partner Agents as part of our growing network. We’re seeing a real shift in consumer demand and as private treaty timelines continue to increase, we can only see this continuing to rise.
Since April we’ve supported Rightmove users to find their dream home using MMoA with our industry-first integration and the property portal giant has recently added a further four auction providers to its platform – the market is moving at pace.
With that in mind, I’d like to unpack some of the most common misconceptions that exist around MMoA and add some much-needed facts to the conversation.
Let’s talk about ‘the fee’
Much of the criticism around MMoA is about the Reservation Fee that is paid by the buyer; and that it is in some way ‘hidden’ and therefore unfair. However, this fee is confirmed with buyers before they can submit a bid.
Any auction house worth its salt will ensure that the fee is communicated with buyers multiple times throughout the journey and that there are no ‘surprises’. At iamsold, Partner Agents, alongside our Auction Specialists, will explain the fees to sellers and buyers. Sellers are made aware of the fee and that the buyer will consider this fee when it comes to placing their bid, keeping everyone fully informed. We ensure it’s clear, in black and white, and there’s no small print and we strive to make this industry standard with our ‘Best Practice Guide’
It’s time for a more efficient way to sell homes
Recent data from TwentyCi showed average completion rates reached 17.6 weeks during September 2021. A huge amount of this time is down to the delays in conveyancing and the complexities of establishing a full picture of material facts. The longer the delay, the higher the risk of fall through. Personal circumstances and financial commitments can change during this time, as well as problems being uncovered that were unknown to the buyer at the point of placing their offer. As such, Private Treaty has an average fall through rate of 30 per cent.
Part of the MMoA process is ensuring that as much information about the property is collected in advance to provide buyers with a detailed Buyers Information Pack. This includes local authority search data, Title register, Title plan, property information form and other documentation and is designed to support buyers to make informed decisions. This builds transparency upfront and supports the 95% completion rate and 56-day timescales.
Meeting consumer demand now, and in the future
How people are looking for and purchasing homes has been changing for some time with the rise of property portals, entirely online or hybrid agencies, and decline of the high street. The pandemic has accelerated that digital-first attitude with many branches choosing to make things like virtual viewings, cloud systems, and apps a permanent fixture.
Agents who choose to adopt digital-first methods are responding directly to consumer demand. Consumers are becoming more digitally confident, with 49 per cent of Accenture’s Reimagined group saying they would switch to providers that offered an enhanced buying experience through digital channels. At a generational level, more and more people are becoming au fait with technology and 36 per cent of Baby Boomers claim to feel more confident in using technology in 2021, an 10% increase on 2020.
As for the homebuyers of the future, 66% of tech-savvy Gen Zs have already started saving for a deposit for their first home. This group aspires to homeownership, they are already saving, and they love good online experiences. Ignore them at your detriment.
By choosing to offer online auctions, agents are getting ahead of the crowd in the drive for digital acceleration. As more potential homebuyers are being considered as digital natives, MMoA online is primed to appeal to those buyers now, and in the future.
It’s suitable for more buyers than you might think
All buyers and sellers have different motivations and needs depending on their situation, whether that’s a need to move home quickly, free up capital or accommodate a change in circumstances such as a new arrival or a relationship breakdown.
When you’ve decided to move home, many people want to get the process done and dusted as quickly as possible – unlikely with the current average completion rates. Agents that can offer clients speed can be a lifeline in these circumstances, but many are missing out because they might assume that auction is only for a niche market. Our data has shown that isn’t the case and auction is suitable for far more clients than agents might think.
Using the iamproperty movebutler platform, clients are taken through a Method of Sale audit where they input their circumstances such as their ideal timescales and whether they have an onward chain. Of the 503 audits conducted from May 2021 – end of September 2021, 46 per cent were recommended for auction, as it aligned with their circumstances and priorities. Yet auction still only accounts for around 3 per cent of UK property sales meaning many clients are missing out on a route that is potentially better for them.
With that in mind, it’s time to leave the negative conversations behind, or at least commit to engaging in a balanced approach that makes room for all methods of sale and gives clients the freedom of choice that they need and deserve.
*Jamie Cooke is the Managing Director of iamsold