Today, online real estate auction platforms have replaced small halls full of people screaming for homes and properties. So, real estate companies should learn how to build a real estate auction site in a digital world.
What’s more interesting is that real estate auction platforms continue to grow. In 2002, 30% of all eCommerce transactions were performed by online auction users.
In 2017, the overall profit of online home auctions reached $394 billion, an annual growth of 13% compared to previous years. So how to build a real estate auction site? And is it worth doing now? In 2020, the U.S. Industry Statistics & Market Research forecast that the industry will only grow during the next five years.
Types of Real Estate Auction Platforms
Before starting to know how to build a real estate auction site, it’s worth checking out the critical online real estate auction types of platforms for home buying gathered below:
Increment allows people to increase the price only by a certain number. In simple words, the increment is a minimum amount that can be raised each time. This is one of the most popular types of online home auctions.
Reserve Price Auction
Reserve price lets the sellers set their minimum for the price they need for the property.
In most cases, this price is hidden. Therefore buyers can only see whether the price has been met or not. Once it’s completed, the highest bid wins the auction.
At automatic auctions, the buyers set the highest price they’re willing to pay for the item. Then, the system bids on the buyer’s behalf automatically. If another bidder places a higher bid, the previous bidder will be outbid.
How Does a Real Estate Auction Platform Work? User Roles
Real estate auction platforms usually have three user roles: sellers, buyers, and moderators.
The first two – sellers and buyers – are the roles of the customers on the auction platform. The third is the auction platform which acts as a moderator for buyers and sellers. Let’s take a closer look at each user role.
The sellers could be homeowners, real estate agents, investors, or asset managers on the real estate auction platform.
Buyers can be users who are purchasing properties for their purposes. At the same time, buyers can be real estate brokers, agents, or real estate investors who buy a property to sell it later for a profit.
Platform Owner as the Moderator
A moderator of a home auction platform can manage the platform’s work. These users and investors are responsible for
- handling transactions
- sale and purchase management
- consulting investors
- verifying or blocking users, etc.
Types of Properties Listed on Auction Platforms
Different online home auctions work with various real estate types. We have gathered the most popular homes and properties listed on an online real estate auction in the paragraph below.
A short sale is a property purchase initiated by a distressed homeowner in an attempt to sell their house for less than the outstanding mortgage on it.
With short-sale homes and properties, both the lender and the borrower get their benefits.
For example, the lender avoids repossessing the property in foreclosure. The borrower avoids ruining their credit and, in some cases, bankruptcy.
Foreclosure is the legal process by which a lender attempts to recover the amount owed on a defaulted loan. It’s possible by taking ownership of and selling the mortgaged property.
A foreclosure property sale is a purchase that a lender forces. A foreclosure is usually the final step of a lengthy pre-foreclosure process. It is typically aimed at finding alternatives for both the lender and borrower to avoid possible negative consequences associated with this legal process.
Bank-owned properties are homes and properties taken into a bank’s ownership after the failure of a foreclosure sale purchase.
Apart from being represented on real estate auction platforms, such properties are also easily accessible for sale on banks’ websites.
As usual, bank-owned homes and properties are sold at discounted prices, making them attractive opportunities for real estate investors.
This kind of real estate consists of investor-owned homes and properties that have been fixed up. After being renovated, these upgraded homes and properties are put up for sale.
For example, such housing is usually popular as the first-time home purchase among the buyers.
This type of property is famous for sale among business owners and investors.
For example, real estate homes and properties are usually used for
- shopping centers
- other business buildings
8 Must-Have Features of a Real Estate Auction Platform
Before starting a real estate auction platform development, it’s crucial to determine the core functionality needed for an MVP, the product’s first version.
Below, we describe the most important features any online auction should have.
User Account Creation
All online home auctions need users and investors to register and create a personal profile. Such an approach helps identify the users and provides smooth communication and cooperation within an auction platform.
As usual, the registration process requires users to specify personal information such as:
- street address
- zip code
- phone number
- email address
- links to social networks
For some categories of users, such as investors, agents, and asset managers, an auction platform may also need the following data:
- company name
- real estate license number
- real estate license state
Hudson and Marshall Registration Feature
Auction.com Registration Feature
Registering for Home Auctions
Once the user is registered to an auction platform, they can search for properties they’d like to buy. However, to start bidding, the users must provide their credit or debit card information.
This information is needed for all payments associated with the platform’s services, including fees and property purchases. Integrating payment processing software into the real estate auction platform is also essential to enable online payments.
Add a Property
This feature allows the sellers to create a new property listing. The sellers should also be able to edit the information about the property.
Add Property Feature
It is also essential to add a description of the property. It should be as detailed as possible:
- number of bedrooms, bathrooms, amenities
- square footage
- information about suburbs, etc.
Hudson and Marshall Properties Description
Photos should be clear and high quality to show all the advantages of the properties. It is essential to set requirements for users to upload pictures that conform to criteria such as size, format, and resolution.
Concierge Auctions Platform High-Quality Photos
An auction timer feature can:
- display the date of an upcoming auction
- show the time left before an auction starts
- indicate the time left for bidding before an auction ends
This feature helps the buyers plan their future participation or see an actual time for bidding once an auction sale starts.
Concierge Website Timer Feature
Notes and Disclaimers
Real estate home auctions have to deal with many legal rights and obligations. Therefore, such services can offer notes and disclaimers informing users about the possible legal details.
For example, notes and disclaimers offer customers details about property occupation or payment conditions.
Hudson and Marshall Notes and Disclaimers
Using modern technologies such as virtual and augmented reality is necessary if companies want to know how to build a real estate auction site. This trend allows the creation of 3D tours for the real estate industry.
Used in online auction platforms, these modern real estate approaches help property buyers take a virtual tour of the property to understand its layout, size, and interior design.
Search, and Filters are must-have features for a real estate auction website. However, it is also vital to include filtering. So, the users can also specify the property details.
Such an advanced search allows the users to narrow the search down by filtering out the properties by specific criteria such as:
- number of bedrooms
- price range
- asset type, etc.
Hudson and Marshall Search and Filters Options
Apart from the search and filtering, there should also be the ability to sort
- remaining auction time
- property price
- property size
- auction date
- popular properties
- new properties
Hudson and Marshall Sorting
Recently Viewed Properties
The recently viewed property feature helps users go back to search results they viewed earlier and return to properties they viewed before.
It is convenient when a real estate auction platform allows adding properties to favorites.
All the searches performed by buyers can be saved to create personalized recommendations for each user based on their previous searches.
This feature helps to provide smoother communication between the users and the platform and improves the user experience in general.
The bidding process usually takes 2-3 minutes on real estate auction platforms. To control this time, the services implement the countdown clock feature, which helps to track this time.
If a buyer bids before the time runs out, the clock resets. If no one bids before the time run out, then the last bid wins the property.
Hubzu Countdown Timer Feature
Automated Bidding Process
This feature helps buyers bid even if they are away from their computers. The automated bidding software automatically places a bid on behalf of a buyer.
For example, such software allows buyers to remain the highest bidder and win an auction, even if they cannot participate in the bidding process.
Buy It Now Functionality
The BIN (Buy It Now) functionality allows sellers to set the special price for which they’d like to sell a property. Therefore, when the price reaches the number assigned by the seller, the property is sold automatically to the buyer.
At the same time, the buyer can buy a property immediately by bidding the seller’s desired price at the very start of the bidding process on an auction.
Auction calendar is helpful when it comes to tracking and choosing the upcoming real estate auctions.
This feature helps the users to search for the new auction events using filters such as:
- event name
- start or end dates
- asset type
Hudson and Marshall Calendar
It’s convenient when the buyers can search for the properties and save the most interested ones for easy access and a better user experience.
The buyers won’t have to search for the same property twice with such a feature.
Hubzu Save Property Feature
When creating a real estate online auction platform, it is crucial to ensure that buyers conveniently place bids. For example, a convenient dashboard for the property and bidding management can be an excellent bidding solution.
Bid4assets Current bidding Listing
Reports and Analytics
A good real estate auction platform should provide buyers and sellers with statistical reports and analytics. As a result, the people who bid can use this feature to analyze the data, provide a practical analysis of their auction activities, and buy a property.
Property Notification Emails
The real estate auction platform users should receive notifications about the platform’s news and activities.
All in all, such messages can be sent by email and contain information about new properties, outbid notices, contract questionnaires, high bid confirmations, documentation, platform updates, news, etc.
Essential Mobile Features
Nowadays, over 76% of internet users use mobile devices to look for a property for sale. That’s why it’s crucial to think about the mobile features of the future real estate auction platform.
This paragraph will describe the most crucial mobile features of online auction services.
- Push Notifications
No mobile application can survive without notifications. Real estate auction mobile applications provide alerts as they inform users about upcoming sales, new listings, fresh bid properties, and other news.
With this feature, the users will never miss an opportunity to find and bid on a property.
- Determining Location
A mobile app can send appropriate property recommendations by determining a user’s location.
In addition, it makes it possible for users to search by their current location, choose a specific address, or use a mobile map.
- Social Sharing
Mobile users can share their properties using text messages and social media with this feature. The users can save the properties they like or share them with other people interested in participating in the auction.
- Real-Time Bidding
With real-time bidding, the users will be able to place their bids and check existing ones placed by other buyers in real-time without waiting to close the offer.
Many users like to share properties with their friends, colleagues, family, or agents. An in-app messaging system ensures that users can share their favorite properties right away and receive replies without leaving the app. This is incredibly convenient, and such a messaging system provides a better user experience.
Monetization Models of a Real Estate Auction Platform
Sellers shouldn’t be the only people who get to make money on your platform.
If you plan to monetize your real estate auction software and make money with it, we suggest checking out the most commonly used revenue models, which we’ve gathered in our article.
Listing Fee for Sellers
Some real estate auction platforms ask their sellers for an additional fee for each property they list. Usually, payments can be calculated as a percentage of the property price. Such fees are non-refundable regardless of success.
Usually, the real estate auction platforms require the final buyer to pay a fee to close the bid and buy the property. Such a commission is paid to the platform for connecting buyers and sellers and usually ranges from 5 to 10% of the overall cost.
Closing Transaction Fee for All Users
Some real estate auction platforms require only sellers to pay a fee before auctioning a property. At the same time, some platforms take payments from both sellers and buyers.
Such a fee can be requested as an additional payment or be added to the property’s final price once the auction is finished.
The transfer tax fee is paid when the property’s title is transferred from the seller to the winner once the bidding is closed and the auction is over.
This tax is stated in the purchase and sale agreement, so the buyer has the opportunity to take it into account before the bidding is closed.
Tax rates depend on the location of the property. For example, there are different transfer tax rates in various U.S. states.
Tips on How to Build a Real Estate Auction Platform Successfully
Conducting Market and Competitors Research
It’s always good to start a product development process by conducting market and competitor research. At Sloboda Studio, we recommend performing a discovery phase before the development stage for a deeper analysis of the product idea, requirements, and evaluation of the possible challenges and solutions.
As usual, a discovery phase helps to determine different aspects of the future product development, such as:
- Core goals
- Product features
- Technology stack
- Platform architecture
- Suitable scope
- Customer pain points
- Challenges or limitations
- User journey
Creating a Unique Value Proposition
Competition in the real estate online auction market is high, so it’s crucial to create a real estate auction website with a unique value proposition to stand out from the competitors. For example, real estate auction platforms can use financing and bridge loans to attract more bids.
Bridge loans are short-term financing that helps homeowners buy a new home before selling their current one. With a bridge loan, the existing house as collateral. Bridge loans can be used to pay for the down payment, bid closing costs, or the remaining balance payment on the existing mortgage.
Deciding on the Type of Development
Many people ask themselves: How can I create my real estate auction site? Which hiring practice should I choose: in-house development or outsourcing?
Sometimes it’s not that easy to find a quick answer.
In-house development helps product owners stay in control: they work with the team, make decisions together, and check the work results once they’re ready. However, in-house development takes more time and resources for control, recruitment, hiring H.R. specialists, and rent.
Outsourcing gives less personal control, which, at the same time, can be backed by project managers who may work as mediators between product owners and the team. At the same time, outsourcing does not need a lot of additional resources such as time and money.
MVP Development and Product Launch
So, how to build a real estate auction site with maximum benefits? Starting the development process with an MVP – minimum viable product – usually saves a lot of time and money when you need to launch fast.
The MVP version of the future product includes only the core product features and doesn’t need as much money to implement as a fully-featured product would.
Therefore, an MVP is the best way to implement an idea into an actual project that can be represented to the audience or investors.
Ensuring User Security
- ID Verification
To make a real estate auction platform a trusted place, it is better to conduct an I.D. verification of each user. Such a practice helps ensure that all the users are real people, preventing fraud.
Therefore, requesting a credit card number and I.D. data should be one of the steps of user account verification.
- Real-Time Auction Tracking
The ability to track all the currently placed bids and receive all the bid updates helps the customers control the current auction situation, react to changes faster, and receive all the basic bid information about their bidding and bidding placed by other participants.
Therefore, this feature allows users to track their current bid activity, making the work more transparent.
A good auction platform should provide users with a rating system to create listings of trusted sellers, increasing transparency.
Reviews help to make a real estate auction platform a trusted place. Thus, if the real estate auction service can provide its customers with accurate and relevant feedback and bid information, it will grow the trust significantly and attract new users.
- Trusted Listings
It’s essential to make the property listings as trusted as possible. Buyers want to know as much as possible about the properties they search for, so it would be nice to include all the necessary information, such as detailed descriptions, clear photos, and all the required documentation.
Getting Customer Feedback
Once the product is launched, its development process isn’t over yet. At this stage, it’s crucial to analyze the feedback: the project users may share valuable thoughts about what works great and give some essential ideas on what to improve or add to make it even better.
Therefore, after getting users’ feedback, it’s important to fix everything that needs to be fixed.
Best Digital Property Auctions: Pros and Cons
There are many online home auctions on the real estate market. Below, we’ll have a quick review of the best and the most popular of them: Auction.com, Hubzu, Hudson & Marshall, Concierge Auctions, and Bid4assets.com.
Auction.com is one of the biggest online real estate auction platforms on the market.
The service provides its customers with detailed information on the properties. For example, each seller must
- upload pictures
- fill out the property description
- add documents
- write details about the property, the local area, and its amenities
Auction.com platform also provides users with an official calendar that has information about all the upcoming market events sorted by the auction date and time.
Hubzu is a popular real estate auction platform that appeals to visitors with excellent credentials and low fees. In addition, the venue also hosts rare market properties and cooperates with local bank institutions.
Hudson & Marshall
Hudson & Marshall’s platform specializes in real-time and online-only home auctions. The site offers a dynamic schedule for any seller to auction a property. So, all the propositions are constrained to 2-3 days but can be closed in a few hours.
Hudson & Marshall Homepage
The most famous Concierge Auctions platform targets a premium audience. The price for each property reaches $2-40 million.
Concierge Auction Platform Homepage
Each property is sorted by location, price, extra costs, and lifestyle on this platform. The buyers can find and bid for properties in particular areas such as
- near mountains,
- golf courses
- beaches or even a ranch
The bid4assets.com platform is a privately held company founded in 1999. The company performs various real estate auctions on its website, including online home auctions, government auctions, and $1 land auctions.
The company works with various financial institutions and real estate funds to bring property auctions to the site.
Real Estate Auction Platform
Our client, a British action company, needed to digitize its business because of its vast growth by building a real estate auction MVP that would allow users to buy and sell properties and participate in online auctions.
Our team helped to create an MVP for a real estate auction platform with such implemented features as:
- Property listing
- Search and navigation
- Property page
- Admin dashboard
The results of our cooperation:
- 3x growth of users and recommendations
- 75% more buyers attracted
- 2.5 speed up the selling process
Based on our experience, we’ve prepared a rough estimation of how long it’s going to take to create a real estate auction marketplace. We advise companies to use Python for the back and React for the front side of real estate auction development.
Need to create a real estate auction platform?
This project is an Airbnb-like startup headquartered in Belgium. Moovle needed our team to turn the idea of their project into an MVP product. The company planned to represent the project to the investors.
In particular, Sloboda Studio had to
- implement all the core features
- integrate the external APIs for listing synchronization
- build listing management mechanism as a whole
In addition, we had to work under a tight schedule of 1.5 months. So, our client could present the solution to investors.
The Moovle project idea was transformed into an MVP with all the required features. As a result of Sloboda Studio’s work, the product was ready in six weeks.
All in all, we implemented the following features:
- Sign in and sign up using social networks
- Property page
- Creating, editing, and deleting property listings
- Accommodation listings
- Full-text search
- Filters system
- Search personalization
- Accommodation requests
- Admin panel
This article shared our experience and insights on how to build a real estate auction site. Real estate products such as increment, reserve price, and automatic home auctions are becoming more and more popular each day.
So how is a real estate auction company started up? When creating a new real estate auction platform, it’s essential to follow the following steps:
- Conducting the discovery phase. Decisions are made regarding future real estate platform type, its core features, and what properties should be listed there.
- Providing MVP development. It’s best to start the development process only when core features are determined, and there’s a roadmap for future development.
- Choosing the monetization models. It’s also essential to decide how the project is going to make money before commencing the development process.
- Ensuring user security. It’s crucial to include ID verification, real-time auction tracking, a ratings and review system, and trusted home listings, so that the platform is safe and convenient to use.
We’re happy to answer any question about how to build a real estate auction site. Contact the Sloboda Studio team for a free consultation today!
Frequently Asked Questions
There are 3 types of auction platforms.
– Increment auction that allows customers to increase the price a certain number of times
– Reserve price auction allows sellers to set the minimum price
– Automatic auction, allows sellers to set the maximum price for buyers.
Choosing a certain type when a company learns how to build a real estate auction site, it’s vital to focus on the audience, its needs, and the type of real estate property.
The auction platform should have at least 8 key features, such as:
1) User registration
2) Listing properties
3) Search and navigation
5) Auction calender
6) Bidder Dashboard
8) Essential mobile features
There is a huge number of auction platforms on the real estate market, but the most popular are:
3) Hudson & Marshall
4) Concierge Auctions