How to place an auction bid for upscale real estate

Kaylie Pferten advises before placing a bid, despite the fact that more people are purchasing luxury real estate at auction these days

An increasing number of investors are spending millions of pounds on properties they may not have even seen in person, on the other side of the world. Although there is a well-established global market for luxury real estate, the number of properties sold at auction in recent yearsoften to foreign buyers who haven't seen the propertieshas grown significantly.

According to Chad Roffers, CEO of Concierge Auctions, a marketplace operated by Sothebys, the global auction house with a sizable real estate division, "purchasing luxury property at auction is becoming more commonplace." "The opportunity and openness that luxury auctions offer are valued by buyers.

44 percent of family offices globally are now seeking to increase their exposure to real estate, according to real estate firm Knight Frank, which releases The Wealth Report annually. This comes after investment volumes have decreased since the market's peak in 2021. A similar pattern can be seen in Christies data. 74 percent of US real estate agents and 58 percent of their European and Asian counterparts, according to a recent survey by the firm, anticipate a rise in demand for luxury real estate this year.

International investors are drawn to both vibrant cities and picturesque vacation spots as luxury real estate markets. While buyers in Europe concentrate on London, Rome, and Paris, New York and Los Angeles compete with each other for prestige sales in the US. The wealthy are also drawn to Cape Town, Singapore, and Dubai. While Malta is a relatively new European hotspot, strengthened by citizenship schemes that allow wealthy investors to establish residency in the European Union, Caribbean properties continue to be in high demand for those seeking sun, sea, and sand.

How to purchase high-end real estate at auction.

There are benefits to purchasing at auction. There is no need for drawn-out discussions with sellers or agents, and the process is swift and transparent, with all offers visible to all parties. Additionally, there is a chance to purchase the property at a favorable price. Both buyers and sellers appreciate that once a sale is agreed upon, it is much more difficult for either party to back out. Deposits are expected from buyers, and sellers are responsible for paying any penalties or legal fees if they decide to back out. Roffers asserts that "naming your price as a buyer has universal appeal." We are also witnessing an increase in the number of sellers and their listing agents contacting us due to their appreciation of time-certain sales and transparency.

A lot of luxury property auctions are still held the old-fashioned way, with buyers bidding in person at an auction house. However, online auctions are also becoming more common. In any case, the auction house will compile a thorough set of resources to assist buyers, such as basic due diligence materials and photography and videos. Along with estimating the likely sale value, it will also set expectations for initial bids.

According to Ian Allen, regional sales director at Hamptons, a real estate company that started holding online auctions a year ago, "Our auctions feel like a traditional sale, but also a bit like bidding on a site such as eBay,". "Although buyers typically wait until the sale is nearing completion to submit their offers, the clock restarts every time a new offer is made to allow other buyers to react.

While many buyers won't, some might come view the property before the auction. Additionally, it might not be feasible to have a viewing if you are bidding on a property that is thousands of miles away. According to Concierge Auctions Roffers, "depending on the market, between 35 and 50 percent of our properties are bought sight unseen, which is not unusual in the industry."

However, the director of the purchasing firm Prime Purchase, Paddy Pritchard-Gordon, cautions that "buyers must do their due diligence." "Take a look at the history of these properties and find out why they are up for sale. Get a survey done because some properties, even luxury ones, may be in terrible shape if they haven't been occupied for a few years. Don't forget to look up the title and any other accessible information.

Finance is the other important factor. A 10% deposit is frequently due right after the auction ends, so buyers must have the money set aside for their purchase. Additionally, there might not be enough time to begin applying for a mortgage.

Amadeus Wilson, director of SPF Short Term Finance, an auction finance specialist, states that "speed is of the essence." Organize everything in advance and make a decision in principle. Knowing how much you can afford to spend will also help you avoid placing an excessive bid.