An online auction service is planning to double the number of estate agency branches using it by the end of this year.
Whoobid currently has 150 branches using it, and plans to expand to 300. It launched last autumn.
Alex Haigh, who co-founded the business with his brother Doug, said that online auctions have had a poor press – the HomeOwners Alliance has been critical because of the fees charged to buyers and the commissions paid to estate agents.
However, Haigh said that his own business differs from other models, with what he describes as “more sensible” commission levels.
It charges buyers a total of 2.5% (sellers pay nothing) of which 1.5% goes to estate agents and the rest to Whoobid.
Each auction sale lasts three hours, but if there is a bid during the last minute, the sale is extended by three minutes.
This, says Haigh, allows for greater competition and the opportunity of a better price for the vendor.
Both ‘traditional’ and ‘modern methods’ are used, with sellers having the choice of a certain sale at the fall of the electronic gavel or the ability to give sellers 28 days to sort out their finances and proceed with the transaction.
The firm’s business model is also reliant on local estate agents to introduce the service to customers, including listing the properties and conducting viewings.
The Property Ombudsman recently advised agents that they must warn sellers that they could get a lower price at auction because buyers factor in their own commission costs.
Haigh said that “as a safety net”, agents pass vendors along to Whoobid at a very early stage, meaning that its own staff discuss with sellers the pros and cons of the method.
The business is rolling out on a regional basis, with teams across the south and in London, and another in the north.
Its ten-strong team includes recruits from an agency background: for example, Kieran Hogan who has joined as a regional manager for London, has worked for both Sequence and Spicerhaart.
Whoobid’s strategy is to break into new regional areas and build its estate agency network to achieve national coverage.
Comments (4)
Have sold 2 properties via Whoobid and it worked very well for us. There are many differing situations with property sales, and this method works well where a quick sale is required. Standard sales are taking longer and longer it seems with some conveyancers being very slow, and an auction sale can be a way to be sure of a quick transaction. One of the properties we siold also had a lot of ‘issues’ but equally offered a lot of potential. Not one for buyers with a mortgage, and the online auction worked very well, with both buyer and seller very happy. All literature provided by the auctioneers, and our own details provide all the information a prospective bidder/buyer would need, and we do make sure the seller is very clear that a fee will be paid by the buyer. For some buyers, no fee to them, usually much cheaper legal costs, and a very quick guaranteed sale if an acceptable bid is received really are an attraction.
Agreed. But most sellers of real property are not being told by the sub agents (not auctioneers) that the price they achieve will likely be affected by the buyer’s premium and the number of bidders reduced, and the buyers are not being told by those agents that stamp duty is payable on that premium (which it is not in the case of chattels). I have just been told in writing by one of the new start-ups which has been soliciting me to join them that there is no stamp duty payable on the premium and the price achieved at auction is the same as if there were no buyer’s fee, and they are holding a conference to encourage “partners” to work with them!
Always amuses me when people start getting hot under the collar about how much a buyer has to pay to purchase through the ‘modern method’ of auction.
Take a look at any auction house dealing in art, cars, effects, equipment etc. Most charge buyer premiums on top of seller commission and fees. Often the buyer premium can be 15% -20%. All that happens is that in order to take account of the premium buyers adjust what they will bid. Sellers know this and realise they will achieve less than in a private sale – but decide it’s a price worth paying.
Now that TPO insists that sellers are made aware of this bleedin’ obvious fact they can make their informed choice to use the auction service or not.
These buyers fees are too extortionate for buyers to pay on top of stamp duty etc.
Convincing a seller to sell by this method is also a challenge.