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Will Most Property Auctions Eventually be Online?

Peter Hemple speaks to property auctioneers about the future of the industry

As reported on the PIN website in November, Auction.com, which sells investment property via an online auction, held its second auction of German properties in early-December and the company plans to expand into Spain in 2014 and has also reportedly set up an office in the UK. The firm has sold $25bn in assets in the US since 2007 and is expected to sell around $7bn of property this year.

A spokesperson for the company explains to me how the online auction works. He says: "The platform is similar to eBay in that the highest bid is shown and the clock counts down. The only difference is, unlike eBay, we do not stop the clock if investors are still bidding. Our bidding platform has an overtime feature whereby if a bid is placed within the last 2 minutes of the auction, the clock will automatically extend another 3.5 minutes. This can go on for as long as anyone wants to bid a higher price."

Auction.com charges a buyer's premium of the higher of €24,000 or 5% +VAT of the total purchase price of the winning bid so there is no direct cost to the seller, which obviously attracts large banks with high volumes of stock to sell. There is also no guide price or starting bid price listed on the site because "investors should conduct their own due diligence and determine their own view of value."

The spokesperson adds: "At the moment we do not intend to start our business in the UK. However, we will continue to evaluate additional markets across Europe and beyond.Our next market is Spain. We currently have an office in Madrid and will be operational at the beginning of 2014."

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