The effects of Covid-19 on online property auctions
In October 1347, 12 ships from the Black Sea, carrying dead and dying sailors, docked in the Sicilian port of Messina. What followed was the deadliest pandemic in history, claiming between 75-200 million human lives between 1347 and 1351. It came to be known as the Black Death. The impact of the Black Death was devastating, causing a near collapse of social and economic structures in Europe.
However, the forced innovation which occurred as a result, led directly to the emergence of one the greatest eras of expansion, transformation and experimentation in art, literature, and architecture the world has ever seen; a time known as the Renaissance.
2020 will forever be known as the year Covid-19 introduced us to lockdowns, working from home and video conferencing as a normal day at the ‘office’. With millions of people around the world working from home for the first time, individuals and businesses alike have been forced to rethink what ‘business as usual’ looks like.
The property industry, and in particular property auctions, are also being forced into finding a Renaissance of their own, a challenge which some are rising to and embracing.
Property auctions by their very nature are communal events, gathering crowds, often in an enclosed space. When the world went into lockdown, property auctions as a live event was immediately prohibited, forcing the industry to focus solely online. Of course, online auctioning has been around for some time, but until Covid, it was never considered as the leading solution for property auctions. For many in the business, that seems to have changed irrevocably, with online auctioning becoming their primary focus, even with the promise of vaccines on the horizon.
The simple reality is, even though the world has changed overnight, buyers and sellers will always be there. It is the companies that are willing to adapt, innovate and stay focused on customer needs that will reap the benefits. Some auction houses have gone fully online for the first time, while others have innovated with technology including drone footage of properties on auction, live streaming of an auctioneer on the rostrum, online consultations with agents and property teams, virtual 3D walkthrough tours and customisable apps for smart phones.
Although this shift to a tech-driven world may be daunting to some, it’s important to remember that the buyers of tomorrow have grown up in a world of touchscreens and instant access, and anything online is second nature to them. In FNB’s November 2020 Property Barometer, economist Siphamandla Mkhwanazi says “In our estimation, market recovery is mainly driven by younger first-time buyers under the age of 35.” Innovating towards a more tech-driven process may very well mean you are catering for the next generation of home buyers.
Online auctions also offer a number of significant benefits. Speaking at its first-ever online webinar on the subject of Covid-19’s impact on the industry, President of the South African Institute of Auctioneers (SAIA), John Cowing highlighted some of these: “The most important advantage (of online auctions) is that it takes auctions to the people and has the potential to attract far larger audiences. It also improves reporting and administration of auctions as all proceedings should be recorded. Online platforms also allow better marketing of assets, as photos and video, or live feeds can be used to view items and can be viewed at the potential buyers’ leisure.”
Other benefits include:
- A more competitive buying environment, often leading to faster sales
- Sellers are not just ‘testing the market’, and a property up for auction, is a property that must be sold, often within as little as 21 days
- Less churn for sellers as auctions attracts only serious buyers
- Fair competition between buyers as everyone adheres to the same terms and conditions
- Properties are available to an unlimited audience and not just those who can physically visit the site
- Transparent sales process
- Flexibility as bidding can be done from anywhere and at any time
Make no mistake, live auctions will always be there, but just like the Black Death brought about the Renaissance, the Covid-19 pandemic has done two things:
- Forced people to try online auctions for the first time
- Forced auction houses to become better equipped to deliver a superior online auctioning experience
Both point to a quite different world for property auctions in a post-Covid world. In fact, there are those who believe that Covid-19 has simply fast-tracked existing trends, and that a shift to online was inevitable. Indeed, the world has changed forever, and it is those that change with it, that will remain relevant.