Auctions as method of sale of real estate are quite rare in the Russian market of suburban housing. What are their main pros and cons? And what are their prospects?
Types of auctions
Auctions as method of sale of real estate used by the government, banks and real estate agencies, which private individuals delegated the right to sell your home. Municipal authorities have the right to sell their property via auction in electronic trading. Banks provide the opportunity to buy a house at a bankruptcy auction in cases when the property was awarded to judicial solutions for the debts on the credits. Real estate agents carry out tenders on their own initiative and are considering them mainly as a marketing ploy, helping to draw the object more attention. Auctions are held on two schemes: the Dutch (when in the course of trading is the lowering of the starting price) and English (when the price increases). As a rule in real estate applies the English method of bidding. To buy a country house auction how to buy land at auction, can anyone. In this review we will focus on the auction, organized by the real estate agencies.
Organizational issues
For real estate companies selling using the auction it is a marketing ploy, designed to attract attention to an object, to distinguish it from many competitors, says the Chairman of the Board of Directors of Kalinka Group Ekaterina Rumyantseva. In the West, quite often the sale of real estate by individuals (or agents) through the completed auction transactions. In our country this practice too. However, at the moment this method of implementation is for Russians rare and not fully understood. So as long as people treat it with distrust and apprehension, says the head of the.
The auction includes several stages, which have to think through the organizers. First assign the starting price. It should be attractive and usually significantly below market. The second advertising campaign, designed to disseminate information about the sale of the object among the potential target audience. Third organization of fashion shows and familiarize interested parties with the documents receive from buyers for price suggestions.
As a rule, no documents for participation in auctions, buyers are not needed. The only contract is between the owner and the realtor-organizer. Most often, the procedure takes about a month.
Coming up for auction, the buyer gets complete information about the house and land, emphasizes the managing partner of “MIEL-offices of real estate” Tatyana Saksonava. The object is ready to deal. Otherwise it makes no sense to conduct the auction, because it is a “quick” format. With normal sales in the country market possible problems with the documents that are excluded from the auction. While the team of realtors has the answers to all the questions. Pre-show getting ready “on all fronts”, from the preparation of a full package of documents on allocation of a special person who will take children who come to the show with my parents.
As told in “MIEL-real estate office Network” at auction, which the company held on 24 December, arrived 22 families, many of whom were children. Of course, in this case a required specialist which is all family members. “The auction runs the full team of up to 10 people. Someone is coming to meet buyers, helping those who are lost (it sometimes happens). Someone is documents, someone answers questions and leads the actual show,” shares the details of Tatiana Saksonava.
That how much from the dealers houses?
As told the Deputy Director of Department of elite residential real estate company Knight Frank Oleg Mikhailik, in the case of the implementation of real estate agencies the final cost to the buyer, usually get the market.
From the standpoint of the end customer, it is hardly such an auction will allow you to purchase a cheaper house, but since it is amplified, an interesting proposal could get into his field of vision, his interest and a specific audience, in General, agrees Director of residential real estate Department at Penny Lane Realty Sergey Kolosnitsyn. “The final price this interest is hardly affected, since the supply on the country market now exceeds demand. But for the owner a chance to quickly realize the property at a discount. That is, a selling option for those who urgently need to get money,” emphasizes the expert.
According to the Director of Department of elite real estate company “Metrium” Ilya Melgunova, on average, the auctions items worth 100-200 million rubles. Potentially the only plus auctions for buyers is the ability to purchase a luxury home is much cheaper than the market average. In the trades often involved those who are trying to purchase a luxury home for the price of the premium or the premium cost of the business class. In practice, however, such transactions are, as a rule, does not end there.
Probably the main difference between the auction conducted by the Agency with the consent or at the request of the owner, is the possibility of the influence of subjective factors on the result of the transaction, noted in Kalinka Group. The outcome is not always determined by the best bid. In the mind of the owner is the amount for which he would be willing to sell the facility, and this number is often extremely high, due to the ignorance of the market, incomprehensible pricing in this location or overall market instability, which inspires the owners of the fear of a bad bargain.
The most optimistic were configured Tatiana Saksonava. According to her, the main advantage when purchasing a country house at the auction for a buyer is an opportunity to acquire an excellent object for the best price.
Pitfalls
One of the mistakes owners who sell homes through auction is an excessively low starting price to attract buyers, the company “Metrium”. That is, the seller puts in advance a price at which he just will not agree to implement the object. To attract the attention of the household is offered for sale at a price 30-50% below market. In the end, this strategy backfires. The object come clients, which initially focused on low budget, so can’t offer a price acceptable to the owner. In the end, individual auctions over real transactions.
Besides, at auction there is no guarantee for a deal, warns Ilya Mogunov. Neither the seller nor the buyer shall be liable for its refusal. Let’s say the house was for sale for 85 million roubles, and even if you are the only one who offered that amount, not the fact that in the end the owner will agree to your terms. But, on the other hand, the buyer can refuse to sign the Treaty, because no contribution, and hence fines when bidding no. Moreover, to insure against these risks impossible. Sellers are not willing to provide the material guarantee, knowing in advance that the price is strongly underestimated, and, most likely, the deal will not happen.
As emphasized in the company Knight Frank, if the auction is not conducted by the Bank and not on a special electronic platform, agreements are made verbally, and the object implementation is made as an ordinary contract of sale.
What’s next?
Overall, the auction sales method in the market of elite country real estate used primarily owners of illiquid households, which are sold over the years, analyzes Ilya Mogunov. The auction is considered an aggressive method which is used to draw the object more attention. Given that the share of illiquid proposal is approaching 85-90%, the next 3-5 years the number of auctions in the market of elite suburban real estate will definitely increase. To sell the property, the owners are ready for all options, including auctions as a way of advertising.
In addition, the realtors are quite willing to act as organizers of trading. Even if they fail to sell the property, they surely will add to customer base, which will suggest alternatives.
At the same time, the core Group had experience of the sale of city object by the method of auction, which showed that the mentality does not allow buyers to purchase in this way, the objects worth more than 80 million rubles. “And this is the main segment that we work with. In the segment of “economy”, where customers are very important to the value of the property, and they often try to save money, use the auction method of sales is more promising. Still, the auction in our country is associated with an emergency method of selling real estate, even if it is not Bank debtors, a private owners who urgently need to sell the asset,” concludes Ekaterina Rumyantseva.
If you compare the number of objects sold through the CYAN, and the number of objects that implement the auction through a specialized Agency, it can be concluded that the choice of those who wish to participate in the auction is quite small, in total Kalinka Group.
In confirmation of the words of Catherine Rumyantsev, Ilya Mogunov cited statistics according to which the auction transaction amount to only 0.5-1.5% of the total market volume.
In a global sense auctions can be a tool for determining market prices, says Oleg Mikhailik. Abroad they are used as a marketing method for the study of the demand for an item and amount for which customers are willing to buy this property. Perhaps in the future in Russia, homeowners will be able to determine with the help of trading Central corridor of the prices at which they can sell.
Thus, considering the overstocking of the country market, the number of auctions in the next few years may increase. But despite this, the quality exhibited in their homes, many of which are outdated and conservative Russian mentality still does not allow trades to acquire in our country truly wide popularity. However, this does not mean that such a possibility of buying a house is completely put to rest. Because participation in the auction the buyer no obligation.
Source: http://smolotka.urbanus.ru/
