Trust and practicality will decide the success of 'online only' auction
ONLINE bidding has been an important ancillary part of the property auction process for most of the past decade.
Typically online participation has accounted for around 10pc of bidding and across the board it has been a useful tool to enable real time pitching for buyers based abroad – in Ireland's case, Britain, the USA and Australia in particular.
But a new variety of Allsop Space online auction, planned for launching on Tuesday, differs from regular online bidding in a number of ways and could revolutionise the sales process here.
Remember, many were dismissive of the new Irish firm when it arrived at the worst point in the property crash, claiming that it would sell properties by the dozen and at auction – a process which had all but dried up entirely.
First of all the Allsop Space plan is for an "online only" auction – that is there will be no "live" event at all.
This eliminates overheads and presumably the cost of participation. Online only house auctions are already a big success in other countries like the US, where the firm auction.com sells billions of dollars worth of homes every year.
Second, by use of An Post registered legal online signature (enabling a signature placed online to be legally binding), the process will involve online bidders putting down real deposits if they are successful – previously online bidders have had to pay their deposits and register first before a bidding session.
Those who bid will automatically have €5,000 deducted from their credit card or bank account if they are successful. They will then be asked to make up a payment to complete the remaining 10pc deposit. If they don't cough up, they are subject to the same laws of contract that "live" bidders adhere to.
Thirdly, there's a built in "auction extend" device to ensure no bidders lose out. Unlike eBay – where potential buyers regularly wait until the very last seconds and so called "snipers" nab products cheaply by being last on the button in the final second frenzy which results – the Allsop Space process will automatically add two more minutes after any bid made in the last 30 seconds, thus ensuring that the very highest bid is achieved for each property.
Fourth, unlike current online processes whereby the potential bidder watches via a live cam link and isn't aware of the other bids other than what he or she can hear on the computer, the Allsop Space system will show each and every bid clearly displayed on the screen. This should make the online bidding process a good deal more transparent.
The monster auction company has invested heavily in this new process and admits that "it might work or it might not, but at least we're trying it out".
Remember that Allsop Space has already revolutionised the Irish property market via its monster auctions that other agencies could not replicate.
If it does take off, it could have some unexpected effects and would probably not impact on the "live" auction process in which online bidding has already played a major role.
Rather it would be more likely to impact on the private treaty market.
RTE's acclaimed documentary 'Desperate House Buys' demonstrated that more than anything else, buyers hate the long and drawn out private treaty bidding process whereby they got wrapped into one house for weeks only to be disappointed.
Many deeply distrust this process and wonder who they are truly up against. The "best and final offer" sealed bidding end game which often occurs at the end of this process is especially despised.
Buyers are likely to favour a system whereby they can view the house and then engage in a transparent process.
Towards providing trust in the system, Allsop Space has employed the same secure software company used by Christies fine arts auctions (which already sells 30pc of its wares in online only bouts) and for ethical trust it has employed the supervision of Ernst and Young to verify the process (think of the accountant who stands in on the Lotto draw) and finally, for handling the cash transactions involved it has employed the globally recognised Global Collect (an online collection company like PayPal).
The new online auction system's success is likely to depend on both practicality and trust – especially the latter when such large amounts of money are involved. In its favour is the fact that we have grown to trust online vendors for regular shopping and for gambling – so why not go the whole hog and buy the biggest investment of our lives online?
Whether or not we Irish ultimately trust the online process enough to buy a house entirely by remote, will ultimately be determined on July 8.