Today, online real estate auction platforms have replaced what used to be small halls full of people screaming the prices they are ready to pay for homes and properties.
What’s more interesting is that real estate auction platforms are continuing to grow. In 2002, 30% of all of eCommerce transactions were performed by online auction users.
In 2017, the overall profit of online home auctions reached $394 billion, which was an annual growth of 13% in comparison 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 continue to grow during the next 5 years.
Types of Real Estate Auction Platforms
Before starting the development process, it’s worth checking out the key 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 met, 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 itself, which acts as a moderator for buyers and sellers. Let’s take a closer look at each user role.
On the real estate auction platform, the sellers could be homeowners, real estate agents, real estate investors, or asset managers.
Buyers can be users who are purchasing properties for their own 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 work of the platform. These kinds of 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 different real estate types. In the paragraph below, we have gathered the most popular types of homes and properties that can be listed on an online real estate auction.
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 having to repossess the property in foreclosure, while 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 by taking ownership of and selling the mortgaged property.
A foreclosure property sale is a purchase that is forced by a lender. A foreclosure is usually the final step of a lengthy pre-foreclosure process, which 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 that were 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, which makes 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 popular for sale among business owners and investors.
For example, real estate homes and properties are usually used for shopping centers, stores, and 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 its core functionality needed for an MVP, the first version of the product.
Below, we describe the most important features any online auction should have.
User Account Creation
All online home auctions need their users and investors to register and create a personal profile. Such an approach helps to identify the users and provide 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 start searching for properties they’d like to buy. However, in order to actually start bidding, the users are required to provide their credit or debit card information.
This information is needed for all payments associated with the platform’s services, including fees and property purchase. To enable online payments, it is also important to integrate payment processing software into the real estate auction platform.
Concierge Auctions Registering Feature
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 after it’s created.
Concierge Auctions Add Property Feature
It is also important 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
As for the photos, they 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 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 to plan their future participation or see an actual time they have for bidding once an auction sale starts.
Concierge Auctions Timer Feature
Notes and Disclaimers
Real estate home auctions have to deal with lots of legal rights and obligations. Therefore, such services can offer notes and disclaimers that inform the 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 a trend that allows the creation of 3D tours for the real estate industry.
Used in online auction platforms, these modern real estate approaches help property buyers to take a virtual tour of the property to get a better understanding of its layout, size, and interior design.
Search and Filters
Search is a must-have feature for a real estate auction website. However, it is also important 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
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 the users to 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 in order 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.
On real estate auction platforms, the bidding process usually takes 2-3 minutes. 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, then the clock resets. If no one bids before the time runs out, then the last bid wins the property.
Hubzu Countdown Timer Feature
Automated Bidding Process
This feature helps a buyer to bid even if they’re currently away from their computer. The automated bidding software automatically places a bid on behalf of a buyer.
For example, such software allows a buyer to remain the highest bidder and win an auction, even if they are currently not able to participate in the bidding process.
Buy It Now Functionality
The BIN (Buy It Now) functionality allows sellers to set the particular price they’d like to sell a property for. Therefore, when the price reaches the number set 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 not only search for the properties, but also save the ones they are most interested in for easy access and a better user experience.
With such a feature, the buyers won’t have to search for the same property twice.
Hubzu Save Property Feature
When creating a real estate online auction platform, it is important to make sure that the buyers can conveniently place bids. For example, a convenient dashboard for the property and bidding management can be a great bidding solution.
Bid4assets Current bidding Listing
Reports and Analytics
A good real estate auction platform should provide its buyers and sellers with statistical reports and analytics. As a result, the people who bid can use this feature to analyze the data, provide an effective analysis of their auction activities, and buy a property.
Property Notification Emails
The users of a real estate auction platform should be able to 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 look for a property for sale using their mobile devices. That’s why it’s important to think about the mobile features of the future real estate auction platform.
In this paragraph, we’ll describe the most crucial mobile features of an online auction service.
- Push Notifications
No mobile application can survive without notifications. For real estate auction mobile applications, it’s crucial to 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
By being able to determine a user’s location, a mobile app can send appropriate property recommendations.
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
With this feature, mobile users are able to share the properties they like using text messages and social media. By doing so, the users can save the properties they like or share them with other people that may be interested in participating in the auction too.
- Real-Time Bidding
With real-time bidding, the users will be able to place their bid and check already existing ones placed by other buyers in real time, without having to wait to close the bid.
Lots of 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 especially 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 are planning 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, fees can be calculated as a percentage of the property price. Such fees are non-refundable regardless of success.
Usually, the real estate auction platforms requires 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 requires only sellers to pay a fee before they can auction a property. At the same time, there are platforms that take fees from both sellers and buyers.
Such a fee can be requested as an additional payment or be added to the final price of the property once the auction is finished.
The transfer tax fee is paid when the title of the property 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 US states.
Tips on How to Build a Real Estate Auction Platform Successfully
Conducting Market and Competitors Research
It’s always a good idea to start a product development process by conducting market and competitor research. At Sloboda Studio, we recommend conducting 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 important 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 buyers to bid.
Bridge loans are a type of short-term financing that help homeowners to buy a new home before selling their current one. With a bridge loan, the existing home is 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
Lots of people ask themselves: How can I create my own real estate auction site? Should I choose in-house development or outsourcing?
Sometimes it’s not that easy to find a quick answer.
Inhouse development helps product owners to stay in control: they work along with the team, make decisions together, and have the ability to check the results of the work once it’s ready. However, in-house development takes more time and resources for control, recruitment, hiring HR 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 do you develop a real estate auction business? 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 a real project that is ready to 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 ID verification of each user. Such a practice helps to make sure that all the users are real people, and doing so prevents fraud.
Therefore, requesting a credit card number and ID data should be one of the steps of user account verification.
- Real-Time Auction Tracking
An ability to track all the currently placed bids and receive all the bid updates helps the customers to control the current auction situation, react to changes faster, and receive all the actual bid information about their bidding and bidding placed by other participants.
Therefore, this feature allows users to track their current bid activity, which makes the work more transparent.
A good auction platform should provide its users with a rating system to create listings of trusted sellers, which increases 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 true and relevant feedback and bid information, this will grow the trust significantly and allow it to attract new users.
- Trusted Listings
It’s important 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 important to analyze the feedback: the users of the project may share valuable thoughts about what works great, but also give some important 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 a large number of 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 is required to upload pictures, fill out the property description, and add documents, details about the property, the local area, and its amenities.
Auction.com platform also provides its users with an official calendar that has information about all the upcoming market events, which are sorted by the auction date and time.
Hubzu is a popular real estate auction platform that appeals to visitors with its great credentials and low fees. In addition, the platform also hosts rare market properties and cooperates with local bank institutions.
Hudson & Marshall
Hudson & Marshall platform specializes in real-time and online-only home auctions. The site offers its own dynamic schedule for any seller to auction a property: all the propositions are constrained to 2-3 days but can be closed in a few hours.
Hudson & Marshall Homepage
Concierge Auctions platform targets the premium audience: the price for each property reaches $2-40 million.
Concierge Auctions Homepage
On the Concierge Auctions platform, each property is sorted by location, price, extra costs, and also the lifestyle it offers. That is why the buyers can find and bid for properties in particular locations such as near mountains, beaches, golf courses, or even a ranch.
The bid4assets.com platform is a privately held company founded in 1999. On its website, the company performs various kinds of real estate auctions, including online home auctions, government auctions, and $1 land auctions.
In order to bring property auctions to the site, the company works with various financial institutions and real estate funds.
This project is an Airbnb-like startup headquartered in Belgium. At the very beginning of our collaboration, Moovle needed our team to turn the idea of their project into an MVP product that was planned to be represented to the investors.
In particular, Sloboda Studio had to implement all the core features, integrate the external APIs for listing synchronization, as well as the listing management mechanism as a whole.
In addition, we had to work under a tight schedule of 1.5 months, so that our client could present the solution to investors.
The Moovle project idea was transformed into a MVP with all the required features. As a result of Sloboda Studio’s work, the product was ready in just 6 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
Property Management System
Our Client is a real estate rental company that rents out multiple residential and vacation properties.
The Client’s requirements were to automate the entire process of managing multiple properties, to centralize data storage, and to have a channel for seamless communication with tenants.
During our collaboration with the client, the Sloboda Studio team was able to build a property management system from scratch. This enabled us to automate repetitive tasks, create efficient data storage and communication channels, as well as to manage multiple properties in one place.
Main implemented features include:
- Online Leases
- Accounting & Reporting
- Maintenance Request Tracking
- Channel Manager
- Properties Posting
In this article, we shared our experience and insights in relation to creating
So how is a real estate auction company started up? When creating a new real estate auction platform, it’s important 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 queries you may have about starting up a real estate auction business. Contact Sloboda Studio team for a free consultation today!