Today we often face an inadequate valuation of state property that is not sold, or, conversely, goes to insiders for nothing. Transparent auctions will eliminate this problem, sell assets at market prices for the profit of the state as a whole and a particular state enterprise separately. This problem occurs not only in state trade but in personal trade as well. Atreus offers transparent and convenient Online Real Estate Auctions for both types of trades on our platform. But first, what is a Real Estate Auction, and how does it work?
A Real Estate Auction is an auction where property (residential, commercial, or land) is sold either by the homebuilder, the homeowner, bank, or the government. It is a new and effective way to sell real estate quickly and easily through public competitive bidding.
- A homebuilder often chooses to sell the group of houses in the auction all at once (particularly if the property still hasn’t found its buyer);
- A homeowner usually puts his estate on auction to sell it as quickly as possible;
- The government auctions estate if the owner failed to pay taxes or broke a certain law;
- A bank sells the house in an auction to avoid selling it as foreclosure (but foreclosure auctions are quite common too);
Let’s see what we mean by “other”. Here is Paul and he inherited a house. But Paul doesn’t need the house, so he sells it in a Real Estate Auction to some social project or just for a high price because the estate is magnificent and rare. And here is a company “N” that wants to sell some buildings that were previously used as storehouses but now “N” has no need in them. The company sells these buildings in a Real estate Auction and gets a reasonable price for the property.
How do Real Estate Auctions work?
Mostly, real estates are put on sale of Foreclosure Auctions or Tax Lien Auctions.
Foreclosure Auction. If a homeowner didn’t pay the mortgage for a few months, they might fall into default and eventually become in foreclosure. If the homeowner doesn’t pay off the debt or solve this problem with the lender in any other way, the lender may put the real estate up for the auction. The above-mentioned auctions are managed by bank-hired trustees.
Tax Lien Auction. If the owner didn’t pay evaluated property taxes, his real estate may be put up for the Tax Lien Auction by an unpaid tax authority. These auctions are held by a local clerk, sheriff, or comptroller’s office.
Winning in the auction works in 3 ways:
- Reserve (Lender confirmation) auction - in this auction lender can decline your offer, even if you are the highest bidder.
- Absolute auction - in this auction if you place the highest bid, you win the property.
- Minimum bid - a seller sets a minimum acceptable price which is publicly visible to all participants.
One more thing is that in some auctions you can come and inspect the property yourself before the auction itself and some auction organizers do not allow future participants to see the estate in real life. David Robertson, a real estate broker and attorney in San Hose, California, strongly recommended participating in open house auctions, i.e the ones, where you can see the house before the bidding process.
Now, as Real Estate Auctions can be conducted online, it brings even more benefits for both buyers and sellers.
Benefits of a Real Estate Auction
While buying or selling real estate you should calculate all benefits for both sides before the auction itself. Let’s take a look:
Benefits to the seller:
- Quicker sale;
- The seller sees precisely when the property will be sold;
- Prepared buyers, who verify their finances before bidding;
- Because of the competition, the final price can be significantly higher than the starting price;
- Guarantee that the property will be taken by the buyer at a true market price;
- No numerous showings;
- The seller does not participate in the negotiation process.
Read more about benefits for sellers in examples further in the article.
Benefits to the buyer:
- Can decide the purchase price;
- No long negotiations;
- Less time spent to buy a property;
- Buyers compete fairly and on equal terms;
- The dates for purchasing and closing are known;
- Buyers get extensive information on the property;
- Smart investments through competitive bidding.
Real Estate Auctions from Atreus
For conducting real estate auctions online Atreus Saas Auction Platform offers a choice of 2 types of ascending auctions: Forward English Auction and Texas Auction. Both auction types have a starting price and allow bidders to place higher bids during the round. But what is the difference between these two auctions? Let’s take a look at the table below.
If you own a distressed property you would like to sell quickly, you are free to try Hybrid Dutch Auction. This is a descending type of auction, which means that the cost is falling gradually and the winner is the bidder who offered the lowest price. You can read more about the specifics of Hybrid Dutch Auction from Atreus in our blog by clicking on the link below.
Let’s see how Real Estate Auctions work in real life. In London, the UK the auctioneer Auction House London sold the estate in Whitehaven, Cumbria for £32,000 when the starting price was only £23,000. Just on June 17th, 2020 the percentage of sold houses in the UK was 88% and the total raised was £12,155,001. For more information on Real Estate Auctions in the United Kingdom please visit their official website.
In Kyiv, Ukraine on June 15th, 2020 the hotel “Dnipro” was sold by the government to LLC Smartland for 111 111 222,22 UAH, which exceeded the initial price by 14 times. The founder of the NAVI e-sport team Oleksandr Kokhanovskyi plans to make it the first hotel equipped for e-sports events in the world. The auction was conducted in the Prozorro system, which Quintagroup developers created.
At the Atreus website, you can customize online auctions to fit your preferences. Our developers can even help you create your own Real Estate Online Auction! Our online auctions provide you with a fully transparent and time-saving process. To try out our Forward English Auction, Texas Auction, Hybrid Dutch Auction, and more for free, test our demo.