Four bidders entered an auction room on Friday 5 October to buy a detached house on Sweeney’s Terrace in Dublin.
The auctioneer ran the process as usual, greeting the bidders, interacting with them, and encouraging offers by lowering the bid increments. Around 20 minutes later, the auctioneer closed the sale to the winning bidder for €345,000 – well above the €250,000 guide price.
This wouldn’t normally be news, except only the bidders and the house were real. The room was virtual, and the auctioneer was computer code.
An artificial intelligence (AI) tool controlled the entire auction process, which took place in real time – unlike other existing auction sites like eBay, for example.
“As far as I’m aware, we’re the first in the world to use AI technology for a property auction,” says Gary Jacobs, director of property firm Allen & Jacobs, which handled the sale.
The online auction platform, called ‘clicktopurchase’, had a section containing all of the legal documents relating to the property.
This meant there was one location where bidders’ solicitors could check the deeds, removing the need to send physical copies by post or courier. If a bidder wanted to offer, they asked their solicitor to verify their identity and, once that happened, they were allowed into the auction room.
There was no initial deposit required at the auction stage, but the transaction became legally binding once the offer was accepted.
Following the sale, there was a 48-hour period for the winning bidder to pay 10% to the vendor’s solicitors. All of the parties involved in the sale digitally signed the contract to make it legally binding. According to Jacobs, all of the other paperwork, such as transfer of title deeds, still happens in the traditional way.
“Because the transaction is done electronically, it is completely beyond manipulation of any sort,” says Neil Singer (CEO of clicktopurchase, pictured above), which developed the AI tool.
“There is absolute proof of the transaction taking place at €345,000. For the bidder, buyer and seller, it is completely transparent. Everyone can see the process.”
Clicktopurchase recorded the transaction on a private blockchain, which is a tamper-proof digital database.
Jacobs says there were two main benefits to handling the auction online with AI. “Online can be used anywhere, and the bidder can be anywhere in the world. There’s no big paper trail where you have people requesting documents from solicitors. Everything is online to be dissected by the other party, and at that point they decide to bid or not,” he says.
Jacobs says he would definitely use the technology again. “It gives transparency and also speeds up the conveyancing process. The feedback we got was that people liked the convenience of it, and the fact they didn’t have to take two hours out of their Friday afternoon to come to an auction room in the city centre.
Looking to the future
Singer believes that AI can work to solicitors’ benefit. “The role of solicitors in checking ownership will be removed going forward, thanks to blockchain, but it will not mitigate their requirements to interpret the legalities around the property.
Blockchain is all about absolute proof and trust – as soon as the title registers are tokenised [a digital code represents each title], ownership of title will be recorded in one’s digital wallet. It will be like opening your physical wallet and showing someone your €20 note inside.
This will show absolute proof of ownership -- and this is where the solicitor’s role in checking that someone owns a property they wish to sell will be removed.
“The solicitor will still need to interpret the title in advising a buyer, but their role will be easier, faster and more efficient.
Lawyers will still have an invaluable role. Digital signatures and blockchain will simply make it far easier to transact.”
New business avenues
The technology could also open up new avenues of business for solicitors beyond just conveyancing – for example, they could make an AI tool and online auction room available to clients.