Bidding process: An alternative to conventional property sales
Many sellers initially set a high asking price in order to have room for negotiation. However, if there are no interested parties, the property sits on the market for too long, which arouses scepticism and often leads to a sale below value. A bidding process can be a sensible alternative here.
How does the bidding process work?
In contrast to an auction or forced sale, the bidding process is an optional sales strategy in which a lower starting price is deliberately chosen. This creates more demand, and as competition among interested parties increases, the price can naturally be driven up. An experienced estate agent can act as a neutral intermediary, assess prospective buyers and manage the process professionally.
For which properties is the bidding process suitable?
- Highly sought-after objects: High demand leads to dynamic price increases.
- Properties that are difficult to sell: Even for properties with little interest, a low entry price can attract new buyers.
- Houses in need of renovation or modernisation: An attractive starting price encourages bidding despite the need for investment.
Two paths to the bidding process
- „Open House“ tour: A fixed viewing appointment to which all interested parties attend. The advantage: Saves time for the seller. The disadvantage: little room for manoeuvre to assess each prospective buyer individually and increased marketing is required.
- Individual viewings with bidding option: Here, individual appointments are initially organised as in a normal sale. Suitable interested parties are specifically selected and then informed about the possibility of a bidding process. This variant enables a better assessment of each potential buyer.
Important information for interested parties
It should be clearly stated in the adverts that a bidding process may take place depending on demand and that the final sale price may be higher than the asking price. It should also be emphasised that the highest bidder with secured financing will be awarded the property. At the same time, no bid is binding: if the price falls below expectations, the seller does not have to accept any of the offers. And conversely, a bidder can also withdraw their offer.
Conclusion: A flexible strategy for the optimum price
Used correctly, the bidding process can drive up the property price and speed up the sales process. With the professional help of an estate agent, risks can be minimised and potential bargain hunters can be efficiently filtered out.
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Robert Schüßler
Property valuer (EIA and IHK)
