The California-based Auction.com, the largest real estate auctioneer in the US, is making its first overseas foray with the imminent launch of its service in Germany. Auction.com organises live web-based auctions of commercial real estate.
“We have chosen Germany as our first market outside the US because we believe it not only provides excellent growth prospects, but also because we see there is clear demand in this market for a fully transparent but simple and cost effective sales process which guarantees buyer and seller anonymity,” said Ken Rivkin, co-CEO of Auction.com Commercial.
Auction.com differs from German property web portals such as ImmobilienScout24, Immonet and Immowelt, which provide a contact platform for sellers and buyers or brokers, in that Auction.com hosts a real-time live auction for properties chosen by the bidder from a wide range of available properties for sale. It’s a more accelerated process than the ‘matching’ platforms for institutional investors being developed by players such as Commercial Network (part of ImmobilienScout24) and Asset Profiler, although it remains to be seen how open potential German sellers will be to open up their books in advance of establishing bidders credentials.
The marketing team at Auction.com emphasise the platform’s transparency and relative speed in concluding deals, compared to the more cumbersome broker-led sales process, while providing the buyer with a wider range of potential properties. In addition to the documents provided on the website for each sale, buyers are also able to physically view the properties ahead of the auction on pre-determined days. Sellers also gain by not being charged a commission, while benefiting from the wide marketing and advertising that supports each auction and receiving exposure to a far wider pool of potential investors than they might otherwise expect. To shield against too low an offer, sellers can set a reserve price. Furthermore, auction participants are required to supply proof of funds before they can register to bid on a property.
The initial auction in Germany is set for December 6th, with the first properties being offered by major financial institutions, property funds, and local German owners. The assets are expected to be commercial multi-family, industrial, retail, office, warehouse and logistics properties. Mixed-used properties and pools of assets, along with loans and bidding guarantees (Ausbietungsgarantien) are typically often included in the company’s US auctions, and which it says it expects to replicate in Germany once the business is established.
Last year in the US, the company auctioned more than 40,000 residential properties, 1,100 commercial properties valued at $1.2bn, and nearly 1,200 commercial loans valued at €4.6bn. It normally holds four to six auctions with 30 to 50 commercial assets each month in the US, and is targeting replicating this freqeuency in Germany. So far this year in the US it has auctioned €4.5bn in commercial assets, and more than €16bn in total since 2007.