In the last quarter of the year, EuroEstates held 5 auctions, 3 in Lisbon and 2 in Porto.
The owners of the properties were the banks BBVA and MILLENNIUMBCP, as well as Real Estate Investment Funds, and the last auction was an innovation in Portugal which we called “reverse auction”.
As with all our auctions, sale prices are special opportunity prices, with one big difference here: prices started at a certain starting value and subsequent bids went down until someone bids.
Hence the reversion auction name, as it is usual for the values to start at a value called exit price and then go up with successively higher bids.
In this case, each property was awarded a bid base value (“start-up value”), which was gradually reduced, at the auctioneer's discretion, until someone in the room was interested in bidding for that value, at which time someone gives the first bid.
This first offer halts the price drop and customers can then bid higher, following the logistics of a traditional auction.
There is always a minimum value at which the owner is willing to sell the property, although he may receive offers that fall below this predefined value. When the last bid was equal to or above the conditional reserve value, the property was automatically sold. If the last bid was lower than the amount previously set, it would be subject to whether or not the owner accepted the amount presented or the bidder raised his bid.
This innovative model is based on the so-called “Dutch auction” used in the Netherlands to sell tulips, a perishable product that has to be sold on the day at the possible price.
In conclusion, it was a format that turned out to be very interesting for its innovative and challenging character, because besides being very stimulating for everyone involved, it also led to reciprocal gains.