By Paul Tzamalis
The COVID-19 pandemic has wreaked havoc on the real estate industry, particularly in Melbourne where prolonged lockdowns have forced an otherwise sluggish industry to accept a new set of tools and ways to think about the auction process.
While many have resisted this progress in recent years, in this case embracing the innovation was the only hope for survival through the crisis.
Many of my colleagues have had mixed experiences with online auctions, but in my mind there’s no doubt that the technology is here to stay, though the key to its success is in its application.
Online auctions are in no way an alternative to on-site auctions. Nothing beats the excitement, the buzz of the crowd, the interplay between auctioneer and bidders, and the emotion that comes when the action is done and the property is knocked down to the successful bidder.
But, as an additional weapon in our auction arsenal, online is a powerful tool that stands to benefit parties on all sides of the transaction – agents, their vendors, and buyers.
Agents have been understandably reticent to embrace online auction. From the conversations I’ve had with dozens of commercial agents in particular, the biggest criticism is that the online platforms don’t allow them to see or manage their buyers through the auction. The concern here is that offers are left on the table, and therefore the best possible outcome is not achieved for the vendor. This is a challenge that the online platform developers will need to overcome before their apps will be fully embraced by the market.
From a vendor’s perspective though, having the option to run an online auction as an addition to an on-site auction is a massive advantage for one simple reason: it creates more competition via exposure to additional bidders who might not be able to attend in person, which therefore can lead to a higher sale price.
And while buyers might consider this a disadvantage to them, it’s quite the opposite. A bidder can now attend as many auctions at the same time as they have devices capable of streaming, which gives them increased opportunity to purchase without needing to attend in person.
Most importantly, even as a stand-alone option during the pandemic, online auction works to facilitate the auction process and bring vendor and bidders together to make a sale. We have seen this across both commercial and residential sectors.
On this point, I can speak from experience, as the last commercial property auction we conducted at The Auction Company prior to lockdown, was online-only for Melbourne Acquisitions. Of course, there was apprehension from agent and vendor (and us too), but the five registered bidders and the dozen bids fielded on the day illustrated that buyers will still participate, even in an online-only setting.
With so much speculation surrounding the immediate future of the market and whether auction has a role to play, we can be certain that technology and its integration with auctions will remain. Online video streaming is not the only advantageous adaptation, with electronic contract signing and virtual tours making their way into the process, which will provide new and better ways to efficiently engage buyers.
Like many other industries, innovation in real estate is the only way forward. Think about automotive: while you might still prefer the roar of the old combustion engine, the electric car is here to stay. Similarly, with new auction technology, we might as well embrace it, and use it to our advantage.
As the market opens up over the coming weeks and months, and as we push into 2021, we hope the COVID hangover will pass and like the rest of the world, the market will realise some sort of COVID-normal.
The challenge to us as an industry will be to reflect on the lessons we were forced to learn throughout the COVID crisis and leverage them to make our own practices, our businesses, and our industry better for the experience.
In my view, this means embracing the technology at hand and pushing it to improve, for the benefit of everyone involved in the property sales process.
Paul Tzamalis is a specialist auctioneer and Director of The Auction Company.