Whilst it was once seen as a way to sell niche or run-down properties, auction is now a mainstream method of sale widely relied upon by estate agents and the public.
More recently, a debate has ensued about the ‘modern method of auction’. This private treaty/auction hybrid seeks to combine the benefits of both; depending on who you ask, it either achieves this to attract a wider pool of buyers, or it creates confusion and a heavy financial burden for the buyer.
The fact that the modern vs traditional method has been so divisive amongst estate agents and the public points to a truth that auction houses must understand: a rigid approach will not work and therefore the best auction houses for agents to work with will adapt to the needs of the agent, rather than the other way round.
A good example of this is the fees charged to the buyer and/or vendor by the auction house on behalf of itself and the estate agent. A £6,000 reservation fee to be paid by the buyer, not contributing towards the purchase price, is used by some auction houses and there are agents who welcome this fee as a strong source of income. Other agents, however, avoid this fee structure as they find it obstructive to sales, with buyers either drastically lowering their budget or being put off the auction altogether.
This is why at Pugh’s our approach when partnering with estate agents is built upon flexibility and collaboration. Agents have their own business models and clientele and must be able to tailor their auction offering to suit this. It is therefore vital for an auction house to allow agents they partner with to do so, to take the core auction offering and package it in a way that works for them.
At Pugh’s, we form collaborative partnerships with our agents rather than apply a template for them to conform to. As a result, we have agents who may look to set auction fees of 3% in total, perhaps half each from the buyer and seller. Other agents wish to offer auction as a completely free method of sale, and instead, they charge the buyer the 3%. Our Chartered Surveyors are on hand to help guide this process to recommend what structure may be most suitable.
Another area in which agents must be allowed to dictate their auction offering is completion timescales. One of the main benefits of an auction is the fixed, secure sale. If the vendor wants a quick sale, or one that won’t fall through, an auction would be the route to facilitate this because of the 28-day completion timescale.
This is, of course, a reason that agents wish to advertise an auction service; it’s an alternative to their private treaty offering that can provide that security of sale to the client, whereas private treaty cannot.
Some estate agents will wish to adapt the 28-day timescales to capture buyers that require more time to complete. Auction houses must be prepared to alter their terms to allow for this. At Pugh’s you will see properties that have a 56-day completion timescale for this reason.
In summary, at Pugh’s we recognise that just like our auction offering differs from other auctioneers’, an estate agent will have their own approach to working with their own clients. If an agent builds and adapts their private treaty offering to suit their market, then they must be able to do the same with an auction offering.
As an auction house forming partnerships with estate agents, it’s integral to their success that we at Pugh’s give agents the tools and guidance to form an offering that works for them.
Pugh provides these tools in the form of a free, white-label auction website, and a partner portal containing training and marketing materials; guidance is given from our Chartered Surveyors and 25-year history; and a flexible approach allows our partner agents to achieve auction success as part of their existing business model.
*Will Thompson is Associate Director at Pugh Auctions