If you've decided to auction your house, then choosing which auction house to use is the most important decision you'll make.
One thing to decide is whether to use a big national auction house or a much smaller one.
Many people dismiss the idea of selling with a smaller auction house, deeming it as a risky move. But I don't agree.
In this article, I'm going to cover some of the factors that are helping smaller auction houses compete with the big boys, and why you should definitely include smaller auction houses on your shortlist.
1. Property portals give massive reach to small auction houses
Going back 10 or 15 years, it was very hard and expensive for new estate agents and auction houses to start up. You had no choice but to sell with a big auction house, because the smaller ones couldn't compete.
This is because of how properties used to attract buyers.
1.1. How properties used to get buyers
For estate agent sales, and lot of sales happened as a result of a physical presence on the high street and expensive advertising in local newspapers.
For auction houses, a lot of sales happened as a result of their list of “registered buyers” who they’d dealt with previously. It was important to have thousands of registered buyers, as they’d be subscribed to receive your new auction catalogues. You could call them about suitable new properties coming to auction too. It'd take years to build up this list.
So if you wanted to start an auction house or estate agency from scratch, you needed a lot of money to throw at your high street presence, your press advertising, and sales people to drum up interest and make connections.
It’s a totally different story now.
You don’t need a long list of previous buyers you’ve dealt with, and you don’t need a hefty marketing budget.
This is because the way people buy properties has changed so much…
1.2. Online portals and social media changed everything
Basically, the majority of sales now come as a result of finding a property online.
There are two rules I follow:
- Personally, I wouldn’t sell my property with an estate agent who wasn’t advertising on Rightmove,
- And I wouldn’t sell my property with an auction house that wasn’t on Rightmove and, to a lesser extent, EIG.
What is EIG?
EIG (Essential Information Group) is basically like Rightmove, but exclusively for auction properties.
Professional auction buyers register with them, and they can access any new auction properties in the country. They can also register to automatically receive alerts about types of properties they're interested in.
So auction houses of any size can now drive awareness of their properties by advertising directly to EIG’s database of buyers. It removes that huge barrier to entry that existed for new auction houses in the past, and chips away at the competitive advantage those bigger companies had.
This is why you see a flood of new, smaller auction houses able to start up: The level of marketing and reach they have with the properties they’re selling now rivals the most established auction houses from day one, because they simply advertise them on Rightmove and EIG.
2. New software solutions provide world-class infrastructure
You don't just need advertising reach to successfully sell properties though. In the property world there's a whole load of admin and compliance and event management to take care of.
As a small business, that used to be really costly. You'd hire administrators and other staff just to tick the various boxes that need ticking. And what about hiring an event space to conduct your auction too? It was costly, difficult, and time consuming.
This huge on-going cost was another obstacle for small businesses.
Now, it's a different story.
2.1. Online auctions and plug-and-play software
In the last few years there's been a huge move towards online auctions. This trend was started by the modern method of auction process. It accelerated dramatically because of the pandemic too, when big in-person auction events simply weren't an option.
So how do you run an online property auction? Surely that takes millions of pounds of investment to develop sophisticated software?
There are now software solutions you can buy off-the-shelf for running online auctions. They plug into your website, and you're up and running.
One auction house I work with use Offr.io. Their software takes care of everything for you:
- It plugs into your website,
- Registers buyers
- Manages viewing appointments
- Completes the necessary anti-money-laundering checks and other compliance
- And ultimately it runs the online auction on the day.
So you don’t need millions of pounds of investment to build sophisticated software to run your auctions, and you don’t need teams of managers and administrators to register and process buyers and run the business. You don't need an expensive event space either.
As a small auction house, you just need a simple off-the-shelf solution like offr.io, and you've got world-class infrastructure.
This is another way smaller "boutique" auction houses are competing with the bigger players.
3. People: It's really about people
Software and advertising reach are extremely important, but they're the foundations. Companies need them to function, but they're not enough to make a company great.
Property is ultimately a business about people, not technology. So what really makes some of these small auction houses great are their people.
3.1. Big companies don't always have the best people
We've all dealt with big companies where you speak with someone, and you just know they don't care. They're just at their day-job, and they're waiting to finish. You maybe even feel like a bit of an inconvenience for them.
It's not really a big deal if it's the person behind the counter at the bank... it's not like you need them to care about helping you cash a cheque.
But when you're dealing with an auction house, and that person's responsible for one of the biggest financial transactions you'll ever make, it can be a serious problem if the person just doesn't care. It can lose you a sale, and it can cost you tens of thousands of pounds.
And trust me, I've been there.
Estate agent woes
As I've written elsewhere, I've personally spent over £300,000 on estate agent fees on properties I've sold. Most of the time, I was on the front line dealing directly with those estate agents selling our properties.
I can tell you from first hand experience that a lot of those agents just did not care.
- They didn't care how long the sale took,
- They didn't care how much it sold for,
- They didn't even care whether it sold or not.
- They might not have even cared if the place burned down on their watch.
In my experience, you're much more likely to find those types of people working in bigger corporations. It's a sad state of affairs, but that's where people end up feeling like they're just a cog in the machine, and you're just another customer on the conveyor belt.
They lose their passion, and their customers pay the price. Try not to be one of them.
Top tier talent
Now, this isn't to say everyone working for a big corporation is a useless robot. That couldn't be further from the truth.
There are extraordinarily talented and experienced people in big companies who care deeply about every single one their customers.
The thing that personally always makes me nervous about dealing with big companies is that you might deal with a really great sales person, who has piles of experience and is really helpful... But after you sign that contract, you're sometimes passed on to someone else. And at that point it's complete pot-luck who ends up dealing with your sale.
3.2. Small business owners
It can be a different story when you deal with small businesses.
Usually, someone sets up their own auction house because they've built up mounds of experience working in a bigger company, and they've got the drive and ambition to do it their own way.
They'll often be on the front lines, and they'll deal with all their customers from start to finish.
They've got the experience, they've got the talent, and they've got the motivation to deliver: No one benefits from a sale as much as they do.
Arguably, rather than going to the biggest auction house you can find, you want this person dealing with your sale.
3.3. Taking a balanced view
Of course, I'm giving two extreme examples here.
There are some careless people working in small companies, and there are obviously a lot of pro's working in the bigger auction houses.
The process those people follow is also important. Big auction houses can offer a more standardised service. On the other hand, smaller auction houses can offer a more tailored experience, and be quicker and more nimble. This can be really useful if you're in an unusual situation, or if your property has some complicated issues.
In the next section, I'll briefly outline what you can do to make sure you choose the best auction house for you regardless whether they're big or small.
4. Tips on choosing an auction house
It's always a good idea to speak with two or three companies before choosing one.
With this article, I don't want to sway you towards using a big auction house or a small one.
Hopefully I've just convinced you that it's at least worth putting a smaller auction house on your shortlist.
So how do you ultimately decide who to pick?
- Check reviews. Before you sign up, go online and check the company's reviews. If there are bad reviews about service or communication or anything else, then think twice.
- Find out who you'll be dealing with. When you're speaking with the sales person at the beginning of the process, make sure you ask about who'll be dealing with your sale. Ask about their experience level.
- Cancel within 14 days if you aren't happy. Whenever you sign a contract, you get a statutory 14-day cooling off period as part of consumer rights legislation. If you aren't happy with the auction house after you get started, use your cooling off period. If they're slow in getting back to you or if things seem disorganised right at the start of the process, they'll probably continue that way. Cancel your contract, and choose another auction house.
Want more advice?
Give me a call. My office number is 0330 223 5568. I can explore your options, and can even introduce you to a couple of auction houses I know and trust.
By Matthew Cooper, Founder of Home Selling Expert