Bidding process as a strategy for selling a property

What is the bidding process and when is it worthwhile?

Unlike a traditional advertisement, the property is not offered at a fixed price in the bidding process. Instead, the seller can Bids from interested parties and compare them. Depending on the property and demand, this can result in quite high profits.

Similar to a classic auction in the art or collector's sector, the success of the bidding process is based on a favorable starting position. If the interested parties outbid each other, the seller benefits from the advantages of this method.

The bidding process originates from the investment property sector, where investors usually act as buyers. However, more and more private sellers are also discovering this option for themselves when they want to sell their condominium or house.

One particular advantage of the bidding process is its short duration. If the planning, implementation and selection of bidders are right, a property can be sold successfully within a few weeks.

How does the bidding process for real estate work?

as with any real estate sale, the success of the bidding process depends on the preparation. Below we outline how a bidding process usually works.

Step 1: Preparation

In the classic bidding process for investment properties, a lot of time and effort is invested in preparing the documents and the exposé. Investors take a very close look at the property as part of the due diligence process. The advantages and risks of the property should therefore be particularly well documented and the seller should be able to answer all detailed questions precisely. The exposé should also make it very clear that the property purchase is a bidding process.

Equally important and part of the preparation phase: defining the target group. Who are the interested parties and potential buyers? When estate agents accompany a bidding process, they usually have industry contacts with potential buyers and investors. For private sellers, it is therefore advisable to seek advice from experienced real estate experts.

Step 2: the bidding rounds

The first bidding round involves contacting all interested parties. They receive all the necessary property information and can arrange a personal viewing appointment. A date is set within the following 2-4 weeks by which the vendor expects bids to be submitted. The bids are submitted in secret - it is only at the end of the bidding round that the individual bidders are told whether their bid was higher than that of the others.

At the end of the first bidding round, the seller informs the bidders of the current highest bid and can then invite them to a further bidding round, including the submission deadline.

How many bidding rounds make sense?

The first bidding round can already show how interested the bidders are in the property. It is therefore difficult to give a general answer as to how many bidding rounds should be held. In total, there should be no more than 3, maybe 4 bidding rounds. After all, as a seller, you don't want to test the patience of interested parties, you want to get the best possible offer.

Step 3: The closing

As soon as the seller is satisfied with a bid, he can accept it. This means that the highest bidder can now purchase the property at the stated price. Important: There is no obligation to sell. If the highest bidder accepts, a contract is signed and the property is entered in the land register as in the case of a conventional property sale.

Further tips on selling real estate by bidding

As with any form of "auction", you as the seller benefit above all from a large number of interested parties and future bidders. This is the only way to create competition and a bidding war, on which the price development and the profit achieved in the end depend. You should therefore show the property to as large a group of people as possible, selected as specifically as possible. This is best achieved with the help of an experienced estate agent. Good estate agents usually have contacts with potential buyers who are looking for similar properties and can therefore identify a very good and suitable target group for your sale.

Experts recommend scheduling as few viewings as possible, if not just one. This gives bidders an idea of the competition, which would otherwise remain invisible during individual viewings.

A final tip: attach great importance to the quality of your sales documents such as the exposé. The pictures should be of high quality and informative; the information should be complete. The only thing you should keep quiet about is your asking price. In the bidding process, each interested party or bidder decides for themselves what purchase price they would like to quote.