In recent years, the phenomenon of apartment auctions has appeared on the real estate market. The auction sales method is of great interest among realtors. True, for most everything is limited to theory. Like, “the technology is probably good, but it’s not applicable in my segment (location). At the same time, elite brokers are confident that trading is appropriate for the mass segment. And realtors specializing in the economy class believe that auctions are for the luxury segment. Few people try to hold an auction, and, as a rule, after trying once, they speak negatively about the auction. But among realtors there is a group of ardent supporters of the auction method of selling apartments. Brokers are confident that this technology is the future. The Elite.RU portal, having interviewed representatives of large real estate agencies, tried to analyze all the pros and cons of auctions, as well as understand who could benefit from this technology.
Auction without a hammer
The method used in the sale of secondary real estate has nothing in common with a classic auction, during which participants shout out the amount they are willing to pay for the product being offered, and the presenter, stirring up interest, counts “one, two, three,” striking in time with the words with a special hammer.
The technology used in the Russian secondary market does not require the simultaneous presence of all participants. The broker conducting the auction, as Ilya Menzhunov, director of the luxury real estate department at Metrium Group, explains, selects several potential clients, who are announced the starting price and timing of the auction (usually several weeks in advance). Then buyers put forward their offers, and the owner chooses the most profitable one.
“Unfortunately, what is called an auction in the real estate market today is, in fact, just an advertising campaign aimed at attracting the maximum number of buyers,” says Timur Sayfutdinov, general director of Point Estate. – The agency enters into an agreement with the owner, according to which he assumes financial obligations for advertising and marketing promotion of the property. Then the apartment is removed from sale for some time, and after this “period of silence” it goes on the market with a scandalously low price - 30-60% below the estimated market price. Naturally, this price attracts a large number of potential buyers. They look at the apartment and indicate the amount for which they are willing to buy. Then several best offers are selected and a bargaining session is held between them. Whoever offered more, in theory, became the happy owner of the property being sold.
Alexander Maltsev, general director of the ZIP Realty agency, who was present at the auction, describes the apartment auction as follows:
– In October I went to an auction. Out of pure interest. The auction was held on Kutuzovsky Prospekt, which is the area of my local specialization, so I decided to watch this action. An apartment with an area of 148 square meters was put up for sale. meters with a starting price of 19.1 million rubles. At the same time, in my opinion, the apartment cost 35-40 million rubles.
The process looked like this: presentations, floor plans and other documents for the apartment were laid out on the table. The realtor conducting the auction spoke with all potential buyers one by one. The “auctioneer” took contacts from each of them, and, in addition, additionally found out what kind of real estate and where they would like to buy. The most sociable ones also talked about their personal lives: family, work, children, problems. At the end of the conversation, the realtor explained to everyone that he would be able to buy a property for 19.1 million only if none of the competitors bid a higher price. After which the auction participants wrote their offers on pieces of paper. In words, almost all potential buyers added that, if necessary, they were ready to pay more.
The auction ran in this mode for two days, then telephone conversations began, during which the leader’s competitors were offered to pay a higher price. In the end, the person who offered 30 million rubles for the apartment won. The owner of the property considered that this amount was not enough and refused to sell. I recently saw this apartment in real estate databases. It was sold for 40 million.
Why didn't they sell the penthouse in the Vienna House?
The auction method of selling housing became widely known in 2014 thanks to an attempt to sell at auction one of the most expensive properties in the capital at that time - a five-level penthouse with an area of 1,800 square meters. meters in the Vienna House residential complex (pictured below).
The sale of the penthouse was handled by the Blackwood agency, and the president of the Public Figure trade union of realtors, Alexander Sankin, who, in fact, is the founder of the auction method of selling housing in Russia, was brought in to organize the auction. On his Facebook account, Mr. Sankin writes that he is a trainer of millionaire agents and champions of the real estate market.
At that time, realtors estimated the market value of the penthouse in the Vienna House at $40-70 million. However, this lot was put up for auction with a shocking starting price of 1 ruble. The auction was scheduled for March 19, 2014, but never took place.
“The sensational story with the auction at the Vienna House was also nothing more than an advertising campaign,” believes Timur Sayfutdinov. – A stir was created around the object, but it all ended with information noise.
The realtor’s words are confirmed by Colliers International PR Director Marat Muradyan, who at that time headed the PR service at the Blackwood agency:
– The auction never took place, but I think the action was a success. The fact that “the largest apartment in Moscow will be sold at auction with a starting price of 1 ruble” was heard from every voice. Almost all Moscow publications wrote about this, and they talked about it on all federal channels. As a result, the number of publications, radio broadcasts and other mentions in the media reached a thousand.
The joy of a PR specialist can be understood, but it is unlikely that the seller of an expensive penthouse had the same goals. The owner needed to sell the property, but the luxury penthouse, despite the hype in the media, still has not found its owner. Ilya Menzhunov says that the penthouse is still in the TOP 10 most expensive apartments in the capital. But the owner no longer hopes to sell the entire property. As Ekaterina Rumyantseva, chairman of the board of directors of Kalinka Group, notes, the owner is ready to cut up and sell the five-level apartment in parts.
How to sell an apartment quickly but cheaply
However, largely thanks to a broad marketing campaign for the sale of a penthouse in the Vienna House, Alexander Sankin gained followers. Today, according to Konstantin Kovalev, managing partner of the Blackwood agency, there are about 30 realtors working in the Moscow secondary real estate market who specialize in apartment auctions, and each of them holds auctions for the sale of a house or apartment approximately once a month.
“Realtors-auctioneers, as a rule, work with the most motivated home sellers,” says Alexander Maltsev. – Moreover, often at the stage of preliminary negotiations with the owners, checking how strong the desire to sell the apartment is, they advise, for example, the owner not to sell, but to rent out the property. And if he still insists on selling, preparations for the auction begin.
Today, when selling housing according to the classical scheme, the agent's commission is on average 3%, for auctioneers - 6%
Preparations for the auction are carried out at the expense of the property owner. The money goes towards an advertising campaign to promote the property, video and photography. Preparing a business-class apartment for auction, according to Alexander Maltsev, will cost 100-120 thousand rubles, and an elite cottage, adds Vesco Group CEO Alexey Averyanov, can reach up to 500 thousand rubles.
The home owner is obliged to pay not only the realtor’s services for holding the auction, but also the commission from the sale of the property, if it takes place, adds Ilya Menzhunov. The commission of auction realtors is also higher than the standard. Today, when selling housing according to the classical scheme, the agent's commission is on average 3%, for auctioneers - 6%.
“Some time before the auction, the apartment is removed from sale, and then comes out with a scandalously low price,” continues Timur Sayfutdinov. – Naturally, such an offer attracts a large number of potential buyers.
Quite often the final price of an apartment does not reflect the discount included in the starting price
Why do homeowners agree to pay advertising costs plus double the commission? The main argument of the auctioneers: the apartment will be sold quickly and at a high price. In the segment of expensive housing, the duration of exposure of apartments is calculated in months, and country houses can be sold for years.
The auction method helps to sell real estate in an average of one to two months. At the same time, auction apologists assure that during the bidding, some potential buyers warm up others, emotions are turned on, there is a stir and the apartment is sold above the market price, at worst - not lower. This is in theory. In fact, buyers participating in auctions rarely show strong emotions.
– Quite often the final price does not “recoup” the discount included in the starting price. Recently, a home that had a fair market value of $3.5 million was put up for auction with a starting price of $1.8 million—almost half that price. The owner and broker hoped to attract more clients by creating a stir using the dumping price. The “trick” didn’t work: the house was sold for $2.3 million, says Ilya Menzhunov. - However, if the final price offered does not suit the owner, then he can refuse to sell - the rules do not prohibit this. But as a result, only 30% of auctions result in deals being concluded.
Sale of apartments put up for auction
Now there are enough proposals of different categories and degrees of readiness.
The residential real estate market is replete with various properties put up for sale for debt. This abundance, in the eyes of an inexperienced buyer, is extremely difficult, and navigating a large number of offers can indeed be difficult. There is a high probability of making a fatal mistake when purchasing an apartment on your own through an auction, since there are many different aspects that the buyer, perhaps making such a transaction for the first time in his life, is not aware of. With experience, of course, the number of mistakes becomes significantly smaller, but the risk of being left without a deposit or taking substandard junk is always there. In such cases, there is a company called InvestTorgi with experienced specialists. Buy an apartment at a bankruptcy auction in any city in Russia that matches your wishes in terms of location, area, quality and price. Our specialists will help you choose an apartment according to your criteria and purchase it profitably. Often, apartments put up for bankruptcy auctions are freed from mortgage encumbrance. As a result, you purchase housing, albeit in a slightly more complicated way, but significantly cheaper than the market price.
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Thanks to this, there is a real opportunity, after a short period of time, to resell the item at the market price. It is worth saying that there will be competition at the auction of the most interesting lots, but there is always the possibility of obtaining housing at a discount from the auction. Customers value our company precisely because we achieve the best results even in cases where the situation gets out of control.
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Auction without obligation
The Kalinka Group company, interested in the new technology, decided to hold an auction for the sale of an apartment in the “House on Mosfilmovskaya”. The initial cost, in agreement with the owner, was set at 75 million rubles.
– This price is significantly lower than the market value of this apartment, although there are lots in the skyscraper of even lower value. To explain what the bets were placed on, we will look at the features of the house and pricing in it, says Ekaterina Rumyantseva, Chairman of the Board of Directors of Kalinka Group. – The house has an unusual configuration, its lines bend along the axis. Accordingly, the internal frame is quite complex and the apartments have some design features. For example, in some lots there are many pillars - structures that are load-bearing, as a result of which they cannot be dismantled. In one apartment there can be 4 or 8 of them, and the owner will have to play with them in the interior. Other apartments in this building do not have good views, and others do not have the best layout.
Apartment with an area of 168 sq. meters, put up for auction, has only one supporting structure. It is located on the 50th floor, which during construction was planned to be left “for our own people.” Here the highest ceilings are 5.3 meters against the standard 3.2, that is, if desired, the living space can be further increased by making a mezzanine. Floor-to-ceiling windows overlook the golf club and Mosfilmovsky pond; Moscow State University and Moscow City are visible from the living room.
Before the auction began, the apartment was withdrawn from sale for two weeks and an extensive advertising campaign was launched. Three days were then set for potential buyers to come and view the apartment.
An attempt to sell the apartment at auction this time was unsuccessful. We noted that buyers were distrustful of the auction; many of them did not rule out that the unfamiliar scheme could be fraudulent.
However, we managed to stir up interest in the property: in these three days, about 19 showings took place, and many offers were made to the owner. Unfortunately, he was not satisfied with the final price. The initial low price only attracts attention to the property, while in the owner’s head there is still a lower price level for which he is willing to sell his property.
Apartments for bankruptcy auction - Moscow
There have been many changes in the modern Russian residential real estate market in recent years.
First of all, in this section we will talk about apartments. You can look at country houses and townhouses in our other sections. People and companies buy houses and apartments and then sell them due to various life circumstances. One of the most common circumstances is the bankruptcy of the owner. We have been helping in the purchase of apartments at auction for more than 10 years. In our online catalog we present you the most interesting things that are currently available from all over Russia. All objects are carefully and carefully selected by analysts of the investment company No. 1 Invest Trading. A whole department of analysts is working on this. At the same time, each lot goes through a strict filter, and garbage offers are rejected. You can trust our specialists.
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