HOW TO BUILD AN AUCTION PLATFORM FOR REAL ESTATE
Mar 14 2020
Property auctions have always been beneficial for sellers as they could quickly close a deal with the highest bid. These platforms are profitable for buyers as well — they can purchase a bank-owned property that previously belonged to loan borrowers. The primary advantage is that customers set the price and the conditions for the deal. Online real estate auctions are thriving right now. Let’s take Auction.com as an example — it is a real estate auction market for buying and selling property owned by financial organizations. The service has developed a large community of more than 4 million buyers and has already sold 329,000 homes. The website’s team receives a commission for each successful deal — it’s a long-term investment that brings returns on a regular basis. How do you create a successful real estate auction website? Let’s find out from the existing examples.
Table of contents
HOW DOES A REAL ESTATE AUCTION SITE WORK?
An auction real estate service targets buyers and sellers who want a quickly closed property deal. Sellers are usually direct owners, or real estate agents, or asset managers. Some online marketplaces are open for property registration, whereas others accept only licensed professionals. Buyers want some rare and cheap deals, and, just like in all auctions, they are looking for a property that’s not available on the general market.
TYPES OF THE AUCTIONED PROPERTY
- Short-sale property. A property holder needs to pay an obligation and needs to get assets with critical measures, such as selling a house. Costs are lower than the property is worth, because such individuals need to bring the deal to a close as quickly as possible.
- Foreclosed properties. A foreclosure allows a lender to take the rights to the property and sell it to cover the loan.
- Real estate owned by banking institutions. If the borrower didn’t pay off the borrowed amount to the bank, the institution takes over the property ownership and puts it on public sale at discounted prices.
- Retail properties. The owners of shopping centers, stores, and other business buildings use auction sites to quickly reach out to investors — the main target audience of trade websites.
The main competitive advantage of a home auction marketplace is a much lower property cost and prompt sales closure. Also, you can target many niches and develop a local real estate auction site or a global premium platform.
HOW TO CREATE REAL ESTATE ONLINE AUCTION WEBSITE
The functionality required to manage online auctions, both from buyer’s and seller’s perspectives, is complex. To create a real estate auction site, you need to incorporate all these features into the platform.
The first step is to enable vendors to put their land up for an auction, either free of charge or with a commission — RealtyBid requests the payment of $150 for one property. Next, empower them to identify the characteristics of their offers, define the duration for bids, alter their postings, re-offer the property, and offer 3D visits. Each posting ought to incorporate pictures and videos. Also, property owners should be able to assign the starting bid for the offer — it will help sellers to demonstrate their expectations. The timer displays how much time is left before the start — it helps customers navigate urgent events.
Users should have access to quick and advanced searches. The first one is limited to 2-3 criteria and allows browsing nearly all available options. Advanced search should include filters on location, cost, bidding dates, asset type, etc. Moreover, the platform has to enable the map view — users should be able to see where the property is located, or look for options based on particular map positions.
Additionally, users should be able to save the best search results and collect their search filters into templates, so they don’t have to re-customize search settings all the time. Saved results can be analyzed by web analysis tools and used to recommend relevant offers in the future.
Online bidding is held online: bidders have a defined time frame for placing bids. The action ends when a single bidder is left, or when the offer hit its bidding deadline. User interfaces should allow them to see opening bids, vendor bids, and the number of active bidders.
The buyer should be able to see the statistics on the bidding progress — what was the highest bid to date, what are the views and visits on the property page, and how much is the average bid. Both parties should have transparent real-time updates on the progress.
Closing a Bid
When the bid is selected, the bidder and buyer sign the contract, which determines the closure conditions and final closing date. The marketplace directs users to an authorized office, where the legal part of the deal is completed.
Bidders should have a real-time calendar where they will see the active dates for all properties of interest. When the date is nearing, users should receive a notification via email or an SMS.
The bidder’s activity can be monitored by a user in lists of saved offers, reports (a property marketplace sends summaries with upcoming events, users’ statistics, and invested money). The platform should also provide abstracts with recommended properties, based on the bidder’s recent activity.
BUILD A SECURITY FRAMEWORK FOR REAL ESTATE INTERNET AUCTION
Auction services need to be reliable to attract customers long-term. The priority of the platform regarding its safety is to ensure that accounts are real and verify the nature of the offer to avoid fraud. Here’s how to do it.
- ID verification. Request a credit card number and ID data to verify if the profile leads to a real person. The ID information is normally checked by the moderation team.
- Tracking. A seller should see all currently placed bids and get updates on finances.
- Ratings. The service has to provide a rating system for buyers and sellers for increased transparency.
- Detailed listings. The platform should request a lot of information about the property, including amenities, photos, and documentation.
The website team should be open to refunding any fees if users faced fraudulent behaviors on the platform and were subjected to some financial damage.
GETTING PROFIT FROM REAL ESTATE ONLINE AUCTIONS
All platforms collect fees to monetize their services. Let’s take a look at the different types of services, but also consider alternative profit sources.
- A registration fee for sellers. Many property websites require a $150-200 fee for each property. Some calculate it in the percentage of property costs. These fees are non-refundable regardless of success.
- Buyer’s premium fee. The final buyer pays a commission for the deal — it’s the payment platforms receive for providing functionality and connecting two parties. These fees are normally 5-10 percent of the final cost. Typically, the minimum fee is $1000.
- Technology fees. While some platforms require only sellers to pay, others collect payments from all users. The fee can be requested upfront or added to the cost of the house after the purchase.
Additionally, a home marketplace can partner with financial institutions. A good example of this is the Hudson & Marshall platform, which works with Wells Fargo, JP Morgan Chase, and others.
EXAMPLES OF BEST DIGITAL PROPERTY AUCTIONS
Let’s take a look at the best real estate auction sites and their functionality. Learning from these auction houses will help you build an online real estate marketplace based on the best practices.
Auction.com is one of the biggest online marketplaces for property deals allows users to keep open bids on 10 offers simultaneously — it’s a must-have feature for serial investors and asset managers. To increase users’ trust, Auction.com launched the First Look Program, which allows buyers to go to the real estate’s location before closing a deal. The website provides detailed information on the property — sellers are required to upload pictures and documents, write descriptions, add details, etc. The site has an official calendar, where all upcoming events are sorted and displayed by date and time.
Hubzu is a popular marketplace with 1.7 million users and a member of the National Auctioneers Association, the platform appeals to visitors with its credentials and lower fees — at Hubzu, the buyer’s premium is around $1000. Additionally, the website hosts rare properties and cooperates with banks. The main page offers a quick property search by location, displays new offers, and featured properties, as well as customer reviews. The website also supports traditional sales without limiting itself to bidding transactions only.
Hudson & Marshall
Hudson & Marshall is a bidding platform that offers real-time and online-only auctions. The site stands apart with its dynamic schedule — offers are constrained to 2-3 days and can be closed in a few hours. A few properties don't have the purchaser's fee, which attracts more potential customers. Personal buyer’s profiles display recent bids, favorite search results, and purchase history. Users can search for offers by property’s location, date, or choose the “Ending Soon” category.
Not all platforms deal with bargain properties. Some, like Concierge Auctions, target premium audience — the average house price is from 2 to 40 million dollars. The website offers a “Sell Now” feature for bidders who can offer a high price before the start of the event.
The offers are sorted not only by locations, prices, and costs but also by the lifestyle. Investors can look up properties near mountains, water, golf courses, or even find a ranch.
THE BOTTOM LINE
Having a clear understanding of the scope of your property platform sets a solid foundation for its success. You can execute this vision by hiring experienced developers with proven market expertise, people who understand the complexities of the market, and users’ needs.
At Exceed Team, we’ve provided web development for multiple real estate projects, building responsive sites, and mobile apps from conceptualization to final implementation, launch, and maintenance. Our professionals are ready to take a look at your ideas — contact us now. Our experienced team of developers, testers, and designers is ready to execute your vision.
Most popular questions
What types of property can you find on an auction platform?
There are short-sale properties, foreclosed properties, real estate owned by banking institutions, and retail properties. A real estate auction service is perfect for buyers and sellers who want to close a property deal quickly and beneficially.
Is there any key functionality for any real estate platform?
The short answer is — yes. To make your website work, you should build Property Adding and Search, Bidding and Closing a Bid, dashboards for sellers and buyers, and live support. Make sure your auction platform has a user-friendly design and mobile version because 80% of users search on smartphones.
How to increase security on a real estate auction platform?
Here are some security features we recommend to build: ID Verification (to be checked by moderators), Tracking (for a seller to see placed bids and get updates on finances), Detailed Listings (full information about each property with photos and documentation), and a Rating System for buyers and sellers.
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