Property auction sector adapts and evolves
When it comes to the adoption of technology in the still traditional property industry, will the Coronavirus be the catalyst for change? So asks MC du Toit, CEO of BidX1 South Africa, a digital property auction company offering end-to-end online transactions. He gives his views below:
Some commentators do believe the Coronavirus will change the way the industry operated. They emphasise the new approaches that savvy agents are taking to support and connect with their customers, such as virtual viewings, 360° walk-throughs and live web-chat. This is a far cry from the decades-ago ballroom venues, so popular for auction events.
The auction model tends to be resilient in the face of economic downturns due to its efficiency; however, an industry whose foundation was large-scale public gatherings has been suddenly and fundamentally challenged by the national lockdown. Auctioneers have been jolted into seeking alternative routes to market.
In some cases, they have worked to preserve the essence of the ballroom tradition – live-streaming an auctioneer on the rostrum, with bids taken online, by phone and by proxy. Others have moved fully online for the first time.
Many of the abovementioned new online developments, adopted quickly to mitigate against business disruption during the pandemic, will undoubtedly become permanent features.
Services like this, which improve customer experience, are brilliant. We use many of them ourselves at BidX1, from drone footage showcasing larger properties to online consultations with our property teams, all designed to maximise transparency, flexibility and access.
But it’s worth noting that these online services tend to address only the earlier stages of the buying process, assisting investors with their initial evaluation of a property.
What we’re not yet seeing to any large extent is the use of technology to improve the fundamentals of the property transaction process. A virtual tour is very helpful to potential purchasers, but it’s a long way from allowing them to complete the entire transaction online, from legal due diligence to digital contract exchange.
The fact is that while we are finding enquiries relatively brisk, limited transactions are taking place at the moment. Market sentiment is certainly playing a role here, in a period characterised by uncertainty, which is in turn affecting consumer confidence. However, it’s also clear that there is healthy investor appetite for real estate in South Africa, and that transactions are happening where buyers can avail themselves of secure and efficient methods of purchasing online.
We’ve seen evidence of this ourselves, having received unconditional bids on 15 out of 22 properties brought to market during the past two months, fetching sound, market-related prices, despite the challenging circumstances. Full service digital offerings, which allow for end-to-end online transactions – including contract exchange – mean that property sales can still take place despite the extended national lockdown.
While this is proof that digitalisation can make our industry more resilient in a period which has certainly raised questions about the viability of traditional sale processes, resilience in the face of external shocks should not be our core motivation for change.
Modernising our industry, increasing buyer and seller trust in the sale process, tackling the inefficiencies and lack of transparency in property transactions… this is where technology and innovation can bring real improvements for all stakeholders. Not just buyers and sellers, but also the professionals involved in property sales, from auctioneers and estate agents to attorneys.
There is much to be gained from a tech-focused approach to property sales, not the least of which is potentially much quicker turnaround times to sell.
Digital platforms ensure buyers have all the most crucial information at their fingertips, including access to the legal documents for each property. This means they can complete due diligence prior to making an offer, making the process more efficient, but also more transparent.
Advanced digital ecosystems also allow buyers to submit deposits securely and make offers online. In the case of auctions specifically, bidders can take advantage of the automatic bidding function by placing a maximum bid through the system – the maximum amount they would be willing to invest in a property – and allowing the system to bid for them.
Meanwhile, offers on each property can be logged and displayed in real-time, bringing further transparency to the process. Finally, contracts can even be exchanged digitally.
In short, advanced digital platforms allow investors to browse, bid and complete purchases from anywhere in the world, offering both convenience and security – while at the same time increasing efficiency and transparency.
It should be noted that none of this changes the fundamental role of the property professional. While online methods allow us to enhance the experience of buying and selling property, they should be backed by professional real estate expertise and detailed market knowledge. The ‘human element’ of our industry remains crucial.
The South African property market is beginning to embrace technology, with today’s challenges highlighting the inefficiencies in the existing transaction process. The Coronavirus may prove to be the catalyst for enduring change, leading to greater adoption of technology across the sales cycle, from marketing to contract exchange.
It’s an opportunity for agents to innovate in favour of buyers and sellers – not just by providing services like virtual tours or live-streamed auctions, but by transforming the fundamentals of the transaction process.”