Buy real estate property at auction

Purchasing at auctions

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Search for a profitable real estate purchasing deal?

If you consider real estate purchasing with short-term investment purposes, it is reasonable to buy a property at auction.
There are hundreds and even maybe thousands of auctions across Europe.

Most auction houses are locally oriented. It means that auction organizers did all needed due-diligence work and know the story of each selling real estate facility.
As well, there are auction information aggregators and catalogs in countries, which accumulate information about upcoming auctions and information about lots to be sold at auctions.
Information about upcoming auctions is changing practically every day.
New facilities can appear at auction at any time.
Thus, for making a profitable deal an investor should define all parameters of real estate property that are significant for their investment purposes:
Country, city, category of real estate, other location requirements, space, investment / purchasing budget, requirements to potential ROI, technical condition of the property.

After that we can collect a list of relevant upcoming auctions, follow the web pages of certain auctions and prepare for biffing at these auctions.

So, the main steps are:

To define requirements to purchasing facility

To choose variants of participating at auctions

To register for bidding

To make deposit payment to the auction organizer

To bid at auctions - one auction after another auction, until successful purchasing

To sign resulting document and pay auction fees

To make a deal - sign a purchasing contract and make a payment for the property

Auctions & auction aggregators in Europe

The list is not completed, of course.

About starting prices

The starting prices for real estate auctions can vary significantly based on numerous factors, including location, property type, market conditions, and the specific auction platform. Here’s a general overview based on typical auction experiences:

Average Minimum Starting Prices
Residential Properties:
The minimum starting price for residential properties can range from around 30,000 to 100,000 Euro (or equivalent in other currencies) in many UK and European auctions, particularly for distressed properties or those in less desirable areas.

Commercial Properties:
The starting prices for commercial properties can start at approximately 100,000 to 250,000 Euro depending on the property type and location.

Average Maximum Starting Prices
Residential Properties:
For more desirable residential properties or those in prime locations, starting prices can reach 500,000 Euro to over 1 million Euro. Luxury properties in premier locations can even have starting bids significantly higher.

Commercial Properties:
The starting bids for high-quality commercial properties can often exceed 500,000 Euro, with premium assets starting in the millions.

Factors Influencing Prices
1. Location: Urban areas generally command higher prices than rural areas.
2. Property Condition: Distressed or foreclosure properties may start at lower prices.
3. Market Conditions: The state of the real estate market (buyer's market vs. seller's market) influences starting prices.
4. Auction Type: Different auctions (government auctions, online platforms, private auctions) may have varying minimum and maximum price ranges.

Conclusion:
While these are rough estimates, it's important to check specific listings on individual auction sites for the most accurate and current information. Additionally, the starting price might not reflect the eventual sale price, as auctions can often lead to competitive bidding scenarios.

Auction statistics

The number of participants and the dynamics of bidding in real estate auctions can vary significantly based on several factors including the type of property, location, and the auction platform itself. Here's a general overview:

Average Number of Participants
Residential Auctions: Typically, residential auctions may see anywhere from 5 to 20 participants. In more competitive markets or for particularly desirable properties, this number can rise to 30 or more.

Commercial Auctions:
Commercial property auctions tend to attract fewer bidders, averaging around 3 to 10 participants per auction.
However, for high-value or very desirable commercial properties, this number can also increase.

Change in Final Price Compared to Initial Price
Residential Properties:
On average, properties sold at auction can achieve final prices that are 5% to 15% higher than their starting bids due to competitive bidding. In hot markets or for highly sought-after homes, final sale prices can exceed the starting bid by 20% or more.

Commercial Properties:
The price increase for commercial assets can also range from 5% to 15%, but in competitive situations, especially for prime assets, it might reach up to 30% or more.

Statistics about Auctions

While specific statistics can vary widely, here are some general metrics that have been observed within the auction market:

1. Success Rate: Many auctions have a success rate (the percentage of properties sold) ranging from 60% to 80%. Some prestigious auction houses may see higher rates depending on their marketing efforts.

2. Time to Sell: Properties sold at auction can close within a few weeks after the auction, while traditional sales may take months.

3. Discounting: If a property does not sell at auction, it may receive a lower price compared to the expected market value, as the seller may be under pressure to sell.

4. Buyer’s Premium: Auctions typically charge a buyer's premium (a percentage of the winning bid), which can range from 2% to 10%, affecting the overall cost for buyers.

Real estate auctions are dynamic, and while the above figures give a broad overview, the actual data can vary by auction type, property, and region. If you are looking for specific statistics, research reports from auction houses, real estate research firms, or industry publications may provide more detailed insights based on their auction data.

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