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Auction networks for estate agents

publication date: Oct 19, 2011
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Over 35,000 properties go to auction every year and in spite of the doldrums in the housing market, public
awareness of the auction process is growing, driving a trend towards auctions as a mainstream route to sale for residential property.

While there are major names like Allsop, Countrywide, Savills and Sequence which have dominated the auction market, traditionally, auctioneers have been small, family firms running on a local basis. This worked well in the days where property was bought and sold locally, but now, with property portals displaying homes, land, commercial and investment properties in every corner of the country to potential buyers across the world, the small auction house can struggle to achieve market share.

When marketing auction services and, indeed, the lots themselves, it is no longer a question of a regular advert in the local press. Information is expected instantly; online viewing, planning and bidding have all changed the game.

When it comes to instructions, larger firms like Allsop and Countrywide have a powerful position with their contacts with
major mortgage lenders who recycle repossessed homes through auction and with major landlords filter properties through them as they rationalise their inventory. So smaller firms may have to battle even to have enough instructions to put on a credible sale.

Enter the concept of the auction network. A simple enough premise that brings together independent auctioneers under one marketing umbrella, with modern, fully functioning websites, training, national support and international marketing and PR.

A slightly different business model is designed to offer estate agents – who have never been involved in auctions to any great degree and have little knowledge of preparing for or conducting an auction – a new and lucrative revenue stream and perhaps a whole new business.

The auction networks offer impressive national marketing, simple systems, support and encouragement and a flow of
properties from sellers who find their website way before they would find a
smaller operator.

The concept is clearly attractive and the networks are very confident of major growth and success, but it is early days and with the recession, as David Sandeman’s report in this magazine shows, auctions have seen a downturn just as ‘normal’ property sales have, so it is, perhaps, a little early to break out the champagne. However, it looks like the model is set to grow as the (promised) recovery starts to become a reality.

Network Auctions

Guy Charrison, one of the UK’s best known and leading property auctioneers, is Chairman of the National Association of Valuers and Auctioneers (NAVA) and of course, a highly vocal evangelist of the auction system. He is also a founding director of Network Auctions, one of two major players in the network system. Auction Networks is a young company but with fellow directors, Toby Limbrick, Stuart Elliott and Mike Limebear, the firm has over 100 years experience in auctions. The estate agent firms join Network Auctions as partners enabling them,  wherever they are based, to offer an auction service that combines their local expertise and strength of brand with the benefits of national marketing and a national auction sale. The sales are held at Hatfield House in Hertfordshire.

Partner agents pay a monthly fee and the sale revenues are split between the agent and Network Auctions (who pay all the marketing and event costs) 70/30. With around 22 partners, comprising estate agents, commercial agents and RICS surveyors. The latest firms to be welcomed into the network include Campsie & Co, Horts, Grey & Co and Lane and Holmes.

All partners benefit from the highly praised auctions skills of Guy Charrison, a star performer on the auction podium; able to charm the pound notes out of the most blank-faced buyer and achieve excellent results for the partner agents.
The average success rate at Network Auctions sales is 73 per cent, with total sales now standing at over £100m. Their first three sales this year raised £9m, down on last year’s £11.3m, but the number of lots sold this year is up by 17 per cent reflecting the market sentiment for lower value lots.

Director Toby Limbrick says that they work with agents, “because our model fits naturally alongside their core business, developing their existing staff and expertise. Agents are property valuers and auctions should be a natural extension of their trade but the technical aspects and costs associated with conducting an auction are prohibitive. Within Network Auctions agents develop an auction department under their brand adding value and enhancing their brand profile – a crucial difference between Network Auctions and Auction House”.

Network Auctions cover the costs of catalogue production, venue, auctioneer and legal administration leaving partners free to concentrate on securing instructions – it’s a low cost/risk route to market. Full training is provided (Guy Charrison also runs training courses for NAVA) together with ongoing mentoring and advertising and PR support.
The future, says Toby, is bright. “In five years’ time Network Auctions will be the market leader in estate agency auctions. Through local expertise and national coverage we offer a compelling alternative to the traditional auction establishment. Our goal is to be the auctioneer of choice for asset managers and corporate sellers.

“Our strategy for growth is based on partnership with agents, supporting them and developing their brands within Network Auctions and we are excited about our growth throughout the UK including Scotland and Northern Ireland.”

Auction House UK

Operating with a slightly different model, Auction House UK was formed in July 2007 by Roger Lake and Bryan Baxter. It now claims to be the largest auctioneer outside London, with 25 auction rooms across England and Wales; accounting for 4.5 per cent of all property auction sales nationally. Established auction houses buy a franchise to operate under the marketing banner of Auction House UK Ltd, and between all the franchisees, it has a massive schedule of 120 auctions in 2011 comprising around 2,000 lots, with clients including local authorities, housing associations, plc landlords, government departments and financial institutions.

Auction House has seen a dramatic year on year rise of more than two thirds in both the number of lots sold and the amount of money raised in 2011.

From January to June, 835 properties were sold compared with 488 in the same period last year – a rise of 71 per cent, AUCTIONsraising £77m – up 68 per cent from last year, at £46m. The company’s average success rate for this year is just over 80 per cent.

The brand is aiming to grow its network of regional auctioneers from 25 to 50 over the next few years. Director Roger Lake, said, “These are spectacular results – especially for a brand which has been in existence for less than five years. They are a clear indicator that our network of regional auction rooms is becoming increasingly successful, and our policy
of selling property locally is now really taking hold.”

In Lancashire, Auction House recently smashed all its previous records with sales totalling £3.67m – over £1m more than its best ever result. In Leeds, Auction House has seen its sales up 40 per cent on the same period last year. And in London, Auction House held its debut sale, achieving the capital’s as yet unmatched success rate for this year of 90 per cent.

Roger added, “Whether measured by individual performance or by the expansion of our coverage, the effectiveness of the Auction House concept is becoming increasingly evident. With an additional five salerooms across the country since last July, we are now well on course to exceed our target of selling 1,500 lots this calendar year.”

www.networkauctions.co.uk

www.auctionhouse.uk.net