Fewer than 2% of all homes sold at auction as gavel growth stagnates

Just under 2% of all residential transactions in the UK take place through auctions.

The proportion of 1.9% is the same as ten years ago, according to the RICS. If correct, it means that more homes are sold through online agents than by auction houses.

But one auction house, IAM Sold, told EYE that if the RICS statistics removed the IAM Sold modern method sales, the figure would reduce below those of ten years ago, reflecting a decline in actual market share of the traditional method.

The modern method gives buyers time to complete their purchase, rather than making it binding at the fall of the gavel.

Jamie Cooke, sales director of IAM Sold, spoke out after concerns were expressed over the lack of growth at the RICS’s Real Estate Auctioneering Conference.

Richard Auterac, chairman of the RICS Real Estate Auction Professional Group, said: “It doesn’t look good.”

At the conference, auctioneer Andrew Binstock, of Auction House, said: “The only way we can get the percentage up to a more sensible market share is just to get everyone to understand auction purchasing.

“There’s no point us fighting against each other, instead we need to [collaborate] and fight against every single estate agent in the high street who are dealing [with] stupidly high valuations which they can never possibly achieve.

“When we go in with our very sensible suggestions of where a guide or a reserve should be set to achieve maximum price, of course they are going to look stupid against an estate agent’s valuation.”

But Cooke said that IAM Sold – which works with agents – has confirmed record consecutive months for sales and instructions, over 70% of which were for the modern method option.

He said: “We now service over 1,000 branches nationwide with almost 90% of our instructions utilising the modern method.

“We have completed on just under £40m so far this year from valuer instructions alone.

“All of those instructions are what you would consider to be traditional private treaty instructions that wanted to benefit from the speed and security that we can offer through the modern method option. They still communicate with their high street agent and market in the normal mediums, i.e portals, sales boards & traditional press, along with our database of over 20,000 investors nationwide.

“The growth will come through diversification of the service offered to the high street client, but the industry is still stuck in a rut, governed by traditional firms who are reluctant to change.

“This isn’t a ‘new kid on the block’ or ‘disrupter’ statement that we read about all too often in trade press –  these are the facts at hand.”

Toby Limbrick of Auction Network said: “The auction market has always provided a much greater degree of certainty, transparency and speed than selling by private treaty and continues to do so.

“This, of course, is of particular interest to a section of the market, but the aspect of a binding contract upon the fall of the gavel does present problems to those looking to tie in a purchase with a sale transaction or possibly in the raising of finance in such finite time frames.

“The emergence of offerings like Network E which Network Auctions and their partner agents offer provides an alternative which combines many of the positive aspects of an auction with an extended completion time frame, enabling those selling by private treaty to transact.

“This is an example of the industry finding innovative solutions in order to meet the needs of both sellers and buyers, and of a professional auction house working with traditional estate agents to ensure that the best method of sale is on offer for every client.”

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