By Lee Leslie and Adrian Strelzow
Governments face unique challenges when selling real property as their portfolios often contain older and unusual properties and sales may be subject to a tricky legal process involving multiple agencies, rigid notice periods, and a live public auction. Although these regulations are designed to ensure transparency and fairness, they often result in an inefficient selling process.
Advantages of online public real estate auctions
The internet has revolutionized auction sales of real estate, empowering people to safely and easily view and buy residential and commercial property from nearly anywhere in the world. The online market for potential purchasers is not just local, but international, and property information can be broadcast instantaneously to prospective purchasers around the world.
Online auction platforms generate numerous benefits to the government seller, including:
An online auction condenses the time period for a sale by streamlining the marketing, due diligence and closing processes, thereby reducing the government’s carrying costs.
Increased number and quality of bidders
Online auctions allow local, national, and international real estate buyers to access a simple and convenient marketplace, resulting in a higher number of qualified bidders and a greater likelihood of an offer conforming to the government’s required terms.
Online auction platforms provide a single marketplace that exposes prospective buyers to multiple offerings, enabling market comparisons to be made quickly and easily. In addition, due diligence and property information is easily distributed in real time, which benefits all bidders (particularly potential buyers that are not based locally).
To take advantage of an online auction platform, the government’s auctioneer must conduct a live auction at a government-mandated location simultaneous with the online auction. Bids from the online auction are read into the record at the live auction, while bids occurring at the live auction are posted to the online auction platform, thereby allowing all bidders to respond to one another in real time. The highest bid on the property, assuming the bid is a conforming offer from a financially responsible party, will win the auction and enter into a contract for purchase immediately following the auction.
In order to best serve the interests of government actors and their constituents, government real property managers should seek out disposition processes focused on maximizing efficiency, sales revenue and transparency of process. When the selling process calls for an auction, whether because of a statutory requirement or otherwise, engaging an online platform can yield significant benefits to the government and other parties. An experienced auctioneer with a proven online platform can yield greater efficiency and transparency and generate a higher price, while maintaining compliance with applicable law and regulations.
Lee Leslie is the chief legal officer of Ten-X (also known as Auction.com). Adrian Strelzow is a supervising broker at Ten-X.