Real estate auction sales - the complete guide

Auction sale of real estate is not a big news, but it is still not well known in our region. This is precisely why we often receive inquiries from potential customers who are unsure about the process itself. And as you know, we like to write, so in this blog we decided to deal with the topic of real estate auction sales.

And so let's start in order:

What exactly is a real estate auction sale?

You are probably familiar with the scene from movies and series: an elegant hall full of people with tables in their hands, bidding for art, excitement... Is the real estate auction sale process similar to such a scenario? Well, not really, although there are some similarities.

As with art, real estate has a starting price. It is determined based on real factors, i.e. market value assessment. However, this is only a framework - the real value of the property is what the buyer is willing to pay. That is why we often advise that the starting price be slightly lower than the so-called "statistical" estimate. This achieves a greater reach of potential customers and generates greater market interest.

It is important to emphasize: an auction is not for every property. It is ideal for those for which we already know that there is increased interest – that is, for attractive, rare or particularly sought-after properties in certain locations. This is precisely its purpose: to allow the market to decide on the value where there is interest.

Also, before the auction begins, the owner and the agent agree on the so-called reserve price – this is the lowest acceptable amount below which the property will not be sold. This is a confidential agreement that serves as a safety net for the seller.

And something else important. If the reserve price or starting price is not reached during the auction, or if the conditions of sale do not meet the seller's expectations – he always has the right to withdraw the property from the sale. Therefore, flexibility and control always remain in his hands.

The auction itself in our country lasts between 30 and 60 days. For other properties, this period varies, so the exact duration of the auction is stated in the advertisement for each of them. Abroad, there is often a specific start date for a property auction, but this is not the case here. In order to maximally adapt to buyers, who are often far from both us and the desired property, the procedure is different - here's what you need to do.

How to participate in an auction?

If you have caught your eye on a property that is going to be auctioned, you must first, of course, view it. You will do this by first contacting us and arranging an appointment. As we said, we adapt to each of you and your time!

Once all interested (potential) buyers have viewed the property, you will have to register for the auction. The auction conditions are predefined and, in order to participate in the auction, you must accept them. That is why we always advise you to seek additional advice before participating. Consult with a lawyer or attorney who will review and explain all the obligations and processes that await you to make sure you know what to expect!

Registering means that you must provide us with your personal information and pay a deposit. The latter is taken as a sign of seriousness and usually amounts to between 300 and 500 euros, and we will send you the payment details. If you do not win the auction, the deposit will be returned to you. The same applies if you decide to withdraw from the auction before you have placed a bid (which is, of course, possible). The only case in which your deposit will not be refunded is if you have already submitted a bid, and then decide to withdraw from the bidding!

The Real Estate Auction Process

Now, as we mentioned earlier, the real estate auction process does not look like you will all sit in one room together and hold up the signs.

You will place your bid for the property via e-mail or mobile phone (SMS) – so it should always be “in writing”. Your bid must be higher than the initial one, and once the auction starts and other bids start arriving, you must beat them too. You will not be groping in the dark – you can always see the last best bid, as well as the bidding deadlines. If you see that the last bid is too high and that you cannot beat it – no one will be hurt! You will just stop making bids and that is it. We will return your deposit if your bid is not the winning one.

But what if your bid is the winning one?

By participating in the auction, you have committed to concluding a purchase and sale agreement. In other words, if you have made the highest bid, you are obligated to buy the property. The process itself looks like this: within two days of the auction ending, you are required to pay 10% of the property value. You then proceed with the pre-agreed purchase process. If you need a loan to purchase the property, we will refer you to a blog we recently wrote on the subject so you can familiarize yourself with each step.

 

 

And that's it!

If you happen to have any other questions left unanswered, feel free to contact us. We wish you luck at the auction - may your bid be the winning one!