As buyers and sellers become increasingly weary of how traditional offline estate agents operate, online property auctions may see a surge in popularity. Frustration with current property selling processes, sellers looking for a quick sale to avoid negative equity, councils and housing associations selling off stock to improve liquidity, as well as a significant increase in repossessions have all contributed to this increase in interest.
Online sales can generate interest and publicity in a way offline sales cannot. There have been cases of properties that have remained unsold and ignored for years attracting huge amounts of interest when made available online.
Higher prices can also result – online auctions offer both a wide bidding window and a highly competitive environment. Decreased overheads cut down the cost of both selling and buying.
Many people are reluctant to carry out such a large transaction over the Internet. Indeed, this is the main reason behind property auctions’ lack of success. Prospective buyers fear properties bought online may have undisclosed legal issues, liabilities, or not be as described. And with good reason – in Spanish auctions in particular, there have been numerous cases of poor-quality and illegal properties being sold via auction to unsuspecting buyers. “Some of the best prices are in developments currently classed as illegal,” Says Ingrid Rix of Direct Auctions.
In order to overcome the understandable reluctance of prospective buyer, online auction companies need to be able to gain clients’ confidence and guarantee respectability and reliability. It’s essential to be able to monitor legal issues and ensure all properties are as they seem. All details and contracts relating to a property must be made available in advance of the sale, and prospective buyers should be encouraged to view properties in person if possible.
Property auctions have a number of special requirements. Most importantly, the financial means of bidders needs to be verified before the auction commences. Verification is usually carried out by requesting that potential bidders send various documents as proof of their financial means. Some online property auctions arrange properties into bands, according to their value. Only bidders with the proven means to purchase properties in a certain band can bid on them.
Property auctions are often carried out online in a tendering form, as opposed to a more conventional auction format. Bidders send “sealed” offers through the website, and it is the choice of the seller whether or not to accept an offer.
Online property auctioneers tend to draw on large property databases.
Online auctioning has not yet shown itself to be a popular method of selling properties, for various reasons. Whether this will continue to be the case remains to be seen.