• Going, going, gone

    Driven by disruptive technology, auction houses are increasingly going digital. But online sales need not rule out face-to-face interaction

    Going, going, gone

    You can pick up just about anything on SA Group Online’s website, an aggregator of online auctions. All you need is the technology through which to access the internet – say, a smartphone or laptop – and, to show you’re serious about bidding, to pay a deposit to gain access.

    These online auctions have become mainstream in Europe – four of the 10 largest continental auction houses surveyed by the Art Newspaper have their own online-only auction platforms. Another two plan to launch their platforms this year. The 300-year-old Dorotheum in Vienna told the newspaper that 70% of its 700 auctions a year are now conducted online only. Ketterer Kunst in Munich has been conducting online auctions since 2007 and created its own platform in 2013. ‘It was clear to us that the internet represents the future for art auctions,’ says owner and chief executive Robert Ketterer ‘We were convinced that online auctions will fill the vacuum that inevitably emerges when numerous objects can no longer be offered in the auction room because of the logistics required and the high costs of catalogues.’

    Absolute transparency and accessibility are the defining factors of online auctions, says MC du Toit, CEO of auctions and sales at BidX1, South Africa. The UK-based property auction platform recently launched in South Africa and held its first online auction in April. All bidders are required to register, complete an identification process and place a deposit before participating in BidX1 auctions; the relevant legal documents of properties to be auctioned are available online for inspection before the auction.

    Every bid is displayed in real time, along with the final sale price, and buyers are assured they are competing against other genuine parties who have completed the same process. During the auction, buyers can assess the demand for property by seeing the competing bids as they come in. Once the lot is sold, the successful buyer instantly enters into a legally binding contract, the handover of which is dealt with by the auctioneer. No quick-tongued individual rifling off numbers, no raised paddle-clutching hands. No hammers.

    Founder and CEO of BidX1 Stephen McCarthy says in a company press release that the rise of online auctions follows the global trend of digital disruption, ‘no less so here in South Africa, where the property industry lends itself to online auction bidding’. An example of the power of the digital platform was illustrated in March 2018, explains McCarthy, when Ireland came to a standstill because of extreme weather. ‘This placed no dampener on our two-day online auction held in the midst of the country’s worst storm in 30 years, when we sold over 210 properties.’

    These online auctions take place fully online and in real time. Every bid placed during the sale of a property is logged and displayed instantly, and this record, along with the sale price, can be viewed publicly on the website, historically and at the time of auction. ‘Fundamentally, the lead-up to the auction is the same [as an on-site auction], but in our case, the transactions happen online and the process is more transparent and fair,’ says Du Toit. More than 40% of BidX1 auction transactions are conducted using a handheld device.

    The South African banks are also getting involved, with First National Bank (FNB) and Standard Bank both opening online sales portals for repossessed properties. Property portals have been around for some time, explains Stanley Mabulu, channel head of FNB home finance division. ‘More people are moving into the app and online spaces as the internet becomes more accessible and cheaper,’ he says. ‘These platforms also reduce some of the friction costs.’

    Yet does this digital platform strip the personal touch from auctions taking place in a physical space? No, says Du Toit. ‘Even though the advanced technology has allowed us to enhance the experience of buying and selling property, it has not changed the fundamental role and personal involvement, advice and guidance of the property professional,’ he says. Potential buyers have access to detailed information on properties for auction and can contact the company for assistance while bidding. According to Mabulu: ‘The traditional estate agent is still very much prevalent. We are finding that customers are using app and online channels to filter searches, to browse and find property. And once they have sifted through this they plan their show-day visits to optimise time and effort,’ he says. Mabulu attributes this use of technology to a new generation entering the market. ‘They seem to be more tech-savvy and exposed to technologies, such as Uber and Airbnb, which makes them less averse to digital channels.’

    Online auctions allow bidders to follow transactions in real time as they happen

    Richard Hardie, CEO of the South African division of global property consulting firm Knight Frank, agrees that traditional buy-and-sell behaviours have been disrupted heavily by the changes brought about by the speed and connectivity of the internet. The global property market has not been spared. ‘With the ease of accessibility supported by the latest virtual apps and augmented experiences, purchasers can view a global offering of interior living spaces and work environments, where information immediacy is delivered in bulk and even social media sharing is an effective advertising channel,’ he says.

    Yet in the same way you may prefer a good old paperback on the couch at home but would rather use a Kindle while travelling, Hardie explains that what has not been disrupted is our affinity for sense and feel when making choices. ‘When buying a home, we need to experience what a city, a suburb, a street and home looks and feels like to us in real time. Who doesn’t enjoy lying in bed on a Sunday morning paging through the large-display property sections, comparing suburbs, spaces and price offerings side-by-side? We thrill at the experience of an open house, comparing and competing with the other potential buyers for a house that everyone wants. And we trust our property area specialist whose photo is displayed on the page, to know and engage with us in relationships that go beyond ad targeting and consumer algorithms,’ says Hardie. ‘Why make a choice of media when you can enjoy the options and pleasures of both?’

    Any channel carries risk and it depends on the customer’s appetite and degree of assistance required in the process, notes Mabulu. ‘To sell full-on privately, to sell with a low-touch assisted model, or go with a traditional agent is a very personal decision.’ He believes there are pros and cons to each of these methods and it’s up to the clients, who are diverse and have different preferences. However, digitalisation, he adds, will reduce overall cost, which can be beneficial to customers.

    Will online property sales portals completely annex the peripatetic and lively physical auctions and property sales? Probably not. It may just be another channel for sales. ‘You will have a mix of digital and face-to-face,’ Mabulu says. He proposes a sales model where a client can ‘proceed digitally to the point they feel comfortable with, and drop out for assistance when required. Digital and face-to-face selling can co-exist’.

    By Sven Hugo
    Images: Gallo/Getty Images, Samantha Pinto/HMimages