When it comes to property auctions, David Sandeman is a respected expert. A qualified barrister with over 30 years industry experience, David founded auction hub and portal Essential Information Group in 1990 after seeing a gap in the market for a reporting service for the UK property auction market. Since then, EIG has become an indispensable source for both buyers and auctioneers. We sat down with David to talk how the industry is adapting, what’s next and how bridging finance is an essential resource for bidders in the auction room.
The main challenges
It’s safe to say it’s been a tumultuous 18 months for the property industry. While some businesses and sectors have tried to adopt a ‘business as usual’ approach, others have made drastic changes. The auction sector fits into the latter. As traditional, in-person events came to a halt, auctioneers had to adapt, and quickly. “I would say that there were three main challenges,” recalls David. The first was how to hold an auction during a national lock-down. Like most services, they went online. While some opted to stream their auctions, around two thirds tried eBay-style bidding. “I was amazed at how everyone got used to the system.”
How to conduct both inspections and viewings also required auctioneers to get creative. Once again, they turned to online, although these were harder to navigate than the actual auctions. “The biggest challenge was that you had to satisfy yourself with the quality of the building. A video tour can’t pick up damp,” says David. Logistics also came into play; with residents having to vacate their properties prior to viewings to maintain social distancing requirements. As video tours became increasingly popular, so too did the auctions’ reach. “We saw a much bigger uptake in online auctions,” he remembers. “Double the amount of people. Now it was so easy to do it. We saw bidders and buyers coming from all over the world.”
The need to adapt
Instead of having a negative impact, this embracing of online auctions has contributed to a 35% year on year increase of lots offered between May and July 2021 and 32% increase in lots sold. While these figures are impressive, David explains they are also somewhat artificial due to the extraordinary circumstances. “Last year, just a few months post-lockdown, vendors and buyers were nervous, so everyone was sitting on the fence and then July, August, September; people thought ‘let’s get on with it’, and business has boomed.” And as the figures show, the same happened this year. While August’s figures were more modest, they were still encouraging with a 23% increase in lots offered and a nearly 22% increase in lots sold. “Confidence is definitely coming back,” says David.
How bridging finance helps
As confidence in the market continues to increase, so too does the need to access capital quickly. With only 28 days to complete a purchase, buyers often don’t have time to secure a traditional mortgage. This is where bridging loans have started to make a noticeable difference. “Bridging finance has been very important with allowing people to access liquidity in a short space of time. You get a decision very quickly, it’s fast, it’s simple, allows you to secure the property and get proper long-term funding,” believes David. Far from being a flash in the pan, he sees bridging loans as a vital component to the auction market. “It’s essential to the industry and underpins a lot of the transactions happening at the moment.”
Looking to the future
So, what’s next for property auctions? Instead of returning to old ways, David believes that Covid has changed the industry permanently. “Given the ease with which people can hold [online] auctions, I don’t think we’re going to see many people go back to the [auction] room.” As well as becoming more accessible for buyers, online auctions are also breaking down barriers for vendors. “We are seeing a lot more entrants come into the market,” says David. “We’re taking on several auctioneers a week and helping them to set up. The barriers to hold an auction have been dramatically reduced, and that’s one of the biggest changes.”
Find out more
At MT Finance, our auction-specific bridging loan has been designed to deliver funds quickly, typically in under 2 weeks. Applications can be approved prior to an auction as well as after. Loans are available between £50,000 and £10,000,000 and up to 70% loan-to-value for residential, commercial, and semi-commercial properties. Terms are available between 1 and 24 months with no early exit fees or early repayment charges. For more information, email the team or call 02030512331. Alternatively, you can fill out our contact form we will be in touch with you shortly.
For more information regarding both buying and selling at auction as well as tools and resources – including a step-by-step guide to making that all-important purchase – David’s team can be contacted via email or phone on 01737 226150.