Time and again, sellers of privately owned properties or properties held in communities of heirs opt for a simple bidding procedure as part of the sales process. Apart from some advantages, this procedure also has disadvantages and usually does not lead to an optimal price determination. A structured and professional sales process, on the other hand, helps both the seller and the buyer. 

Bidding processes last only a short time, and the time to find the optimal buyer and thus the optimal price is very limited. Prospective buyers have only little time to inspect the property, to make well-founded clarifications about the property, to commit themselves emotionally to the property and to offer a price. The bidding process is rather unpopular with potential buyers and deters some interested parties from the outset. Such procedures are often organised by consultants without special knowledge of the property and the market knowledge and to the exclusion of meaningful documentation. Similarly, sellers do not pay enough attention to buyers and their needs in this process. The highest bidder wins the bid. The focus is thus on the purely technical execution of a sales contract. But the widespread assumption that this is the optimum is usually wrong.

Successful sales process
In order to identify the best buyer, a detailed property sales strategy must be employed. The basis is the sales price to be determined in combination with extensive market knowledge. Today, the estimated value cannot always be assessed with the usual hedonic tools. One should be able to fall back on effective transaction data. Because public availability on real estate transactions is low, especially in the canton of Graubünden, only active market participants with numerous sales and frequent appraisal work have access to this market data. In the marketing phase, the implementation of the targeted sales concept and the sales strategy are as well as the broker's buyer network and the clarifications to be made with authorities or with architects are very decisive. In contrast to the bidding process, the choice of potential interested parties is unlimited. The interplay of correct clarifications, the right pricing, structured marketing and timing leads to success and the best sales price.

When a bidding procedure makes sense
Bidding procedures can nevertheless be a good alternative in exceptional situations. There are primarily three reasons in favour of such an auction. Firstly, the seller is dependent on quick returns from the sale and does not want to or cannot take the time for comprehensive advice and support from specialists. Secondly, the type of property plays an important role. When selling building land or investment properties, i.e. apartment buildings, buyers are mainly professional real estate investors or project developers. This group has very good market knowledge, and the achievable sales price will therefore almost automatically be at a realistic level - especially in the current negative interest rate environment. Thirdly: The presumed sales value cannot be determined in advance.
Here it is recommended to set an attractive offer price so that as many offers as possible are received. Furthermore, the rules of the game and thus the number of bidding rounds should be made known to all bidders in advance and adhered to..

Real estate expertise pays off
The sale of a property is not only complex, but the value of the property usually accounts for the largest part of a seller's assets. Good planning, knowledge of the market and the network of the estate agent entrusted with the sale are important factors that decisively optimise the achievable sales price. And working with a real estate specialist builds trust for both the seller and the buyer.

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Sascha Ginesta, certified business economist HF and real estate appraiser with federal diploma, is head of marketing Graubünden and partner at Ginesta Immobilien.