High Street Auctions is led by two men who are specialists in various property-related disciplines. The combination of skills presented them with an opportunity to provide the best advice and maximise the returns on property-related transactions. Joint Managing Directors James Dall and Lance Chalwin-Milton share their service offerings and experience.
What are the benefits of the traditional auction system in the real estate market, and how has this developed or evolved over the years?
Lance Chalwin-Milton: Auctions have traditionally been viewed as the last resort for distressed property sales.
This was usually executed by the appointed sheriff in what can best be described as a crude and a rather scary process. The virtues of the auction system, however, have some great advantages such as access (preventing exclusionary tactics), transparency (held in open public fora), speed (transactions can be concluded with the fall of the hammer on the day of auction) and protection (sellers and buyers have great protection in the process).
The really good auction houses add effective marketing strategies, world-class auction events and professional services to the mix to make it an exciting, pleasurable and effective process. Buyers and sellers of property—even large, listed property funds—have become more and more exposed to the auction platform and now understand how to leverage these advantages for their own good.
They have also, obviously, become more discerning with regard to who they associate themselves or their properties with because reputation management is still an important aspect in their decision-making processes.
How did the idea of buying by tender/auction transpire, and what were the challenges along the way in terms of creating the platform?
James Dall: We expanded the traditional distressed property auction model to include private and corporate disposals.
The biggest challenge was changing the perception that only distressed properties went on auction. Consequently, potential customers didn’t want to create the impression that they or their properties were in distress as a result. We had to engage potential customers on a new level so we invested heavily in marketing and PR to promote the benefits of this platform as an effective, reliable and prestigious platform. Today, 90% of our auctions are not distressed property sales.
How long was the process from conception to implementation and, finally, to going live?
JD: The shareholders and directors of High Street Auctions were all involved with property long before the company was established. Some of us were already involved in auctions and others in property development. Once we got together, it involved a merging of businesses rather than creating a new one so it happened fairly quickly.
The establishment of the new High Street Auctions brand obviously took a little longer to establish and expand. Since then, we have continued to improve technology, marketing, business process and expertise within the team.
What are the ICT challenges of making this disruption happen?
JD: Information management is critical to business success in most industries and property auctions are no exception. In order to match the data management process to our business model, we had to develop a proprietary information management system from scratch that integrated our back office operations with the public face of the business—the highstreetauctions.com website. We then extended the access to information by linking our property information to third party portals such as property24.com and others.
To serve the mobile market, we redeveloped our website to be responsive to mobile devices and even developed a mobi site linked to SMS. We are currently in the process of finalising development of an online auction system that would be available on desktop and mobile phones. This will allow us to serve a larger clientele—especially property transactions that are too small to feature on our premier multi-property auctions at Summer Place—and keep our business open on a 24/7 basis where the listing and bidding process can be automated to a large extent.
The biggest challenge with ICT systems is ensuring that the “automated” solutions are consistently in line with the Consumer Protection Act (CPA), our own high standards of ethics and transparency and international best practice.
Please explain how this is levelling the playing field for big and small buyers, and what the impact is going to be on price in the market as a result of greater openness and access to information?
JD: Firstly, successful auctions are the ones that attract the most interest and the best way of attracting interest is through effective marketing and communication. This ensures the best property opportunities are never kept a secret—all buyers, big and small, get to see what is available.
Secondly, the method of auction ensures complete transparency. This means that all buyers are allowed to compete for the properties they wish to buy in an open, fair and candid way.
Gone are the days of secret boardroom meetings where properties are exchanged between the few in the know. We believe that the auction platform represents the most efficient and fair method of trading property for entities concerned with transparency and good governance.
How will your platform transform the ways in which the market interacts?
JD: The key benefits to our system for transacting property include thorough due diligence and property assessment processes, extensive marketing and reach, effective information management, speed of transacting and transparency. We believe that these benefits are becoming more and more relevant in the market and, consequently, becoming more and more appealing to a wider customer base.
What is involved in the due diligence process and how is this a benefit for the industry as a whole?
LCM: High Street Auction Co prides itself on being the leader in the industry as we prepare our Investor Packs (Due Diligence Packs) thoroughly.
We investigate, assemble and interrogate all information provided to use by the seller. We enquire from various municipal authorities about all the relevant municipal information around the property and build Due Diligence documents that would normally take the buyer considerable time and money to compile. It should be noted that we do not undertake structural surveys.
The financial and property information allows the buyer to conduct his own due diligence process with all the necessary tools.
What are the challenges you face in ensuring this incredible concept becomes a dominant force in the market?
LCM: We have spent the last six years building education and awareness around the best property brand in the country. Indeed, there have been numerous meetings in that time where the resistance to an auction has been discussed at length. I would like to think that the majority of those perceptions and worries have now been allayed. We are fortunate to host the premium auction events in the country where purchasers and sellers are given the opportunity to experience High Street Auctions firsthand—these events are the biggest tool in overcoming difficulties and hurdles.
What has the response from the market been to date?
LCM: We have been very fortunate to have experienced accelerated growth in our business since inception. Initially, when we were still small with limited resources, we invested heavily in developing a strong brand presence in our target market.
With careful planning, we seemed to be everywhere and our potential customers started becoming real customers. Our challenge was then to meet their expectation of our “Premier marketplace for selling and buying property” promise.
We managed to increase our turnover from R100 million in the first year to over R1 billion four years later.
James, how has being a veteran of the property development and property auction industries helped you to be part of this disruptive project?
JD: My experience as a Civil Engineer has been a huge advantage in my appreciation of property values and how property corporations work.
This insight allows me to connect more easily with customers in that industry and provide insights that I have learned working in and around that industry. Working in diverse operations, albeit in the same industry, does accelerate learning and provide the opportunity to share idea that work.
Lance, how has your experience in the food service sector benefitted you in the auction and ‘online’ world?
LCM: I believe there can be no better classroom in which to learn how to be with and interact with people than the food business. The experience I took away from those 10 years taught me to be involved with my team and clients in the way that I am.