The electronic real estate auction service recently launched by the Ministry of Justice has received mixed reactions from real estate professionals, especially in its current phase, which coincided with the measures taken by the state to limit the spread of the novel coronavirus. This was attributed to the promotion of the principle of transparency, raising the level of competitiveness among members of society, the ease of verifying the eligibility of participants, and reducing the difficulty of attendance procedures.
The newspaper " Amlak Real Estate " surveyed a number of specialists and real estate professionals on the subject and came up with the following results:
Abdulaziz Al-Rashid: Changing the concepts of the real estate market
At the outset, Abdulaziz bin Fahd Al-Rashid, Chairman of the Board of Directors of Itqan Real Estate Company, welcomed the step of implementing electronic auctions, stressing that it is a real addition to the real estate market. He explained that they at Itqan Company had kept pace with these changes early, as an understanding was reached with Elm Company to develop their auction platform so that they could develop their services to improve the real estate sector by updating and innovating methods and combining them with experience and supporting them with distinguished partnerships, at a time when the world’s attention is turning to digital platforms.
Al-Rashid added that this service accommodates the largest number of clients and those wishing to enter the auction, and saves them time and effort. We, in turn, look forward to serving the largest number of our partners and achieving the highest return for them. Al-Rashid stated that the team that supervises this service has high experience and skill in managing the real estate aspect, and he expected that electronic auctions will create fruitful opportunities and will change a number of concepts in the real estate market.
Bandar Al-Hamoud: Traditional auctions are indispensable.
On the same subject, judicial sales agent Bandar Al-Hamoud, owner of an auction company, confirmed that the introduction of electronic auctions cannot replace traditional auctions, even if the idea matures. He cited some countries that preceded us in this field, explaining that they did not achieve complete success. Al-Hamoud added, "If we look at what is being offered now and what is expected to be offered, we will find it is a lot, and electronic auctions may not be enough to accommodate it. But in these exceptional circumstances, we are forced to use this type, and it is not an option, according to my belief, which may be right or wrong. And according to my experience in auctions, organizing electronic auctions is done at the lowest cost."
Al-Hamoud stressed that some real estate agents do not attend traditional auctions because they do not want to bring a certified check, and others prefer to bring the purchase price in cash, so what if you offered them the opportunity to enter an electronic auction where all operations are conducted remotely?!
Hashim Al-Aidaroos: The idea of real estate auctions allows for site study.
For his part, Hashem Mahdar Al-Aidaroos, CEO of Rimal Al-Rabwa Real Estate Company in Makkah, explained that the idea of electronic auctions is excellent, as it gives the buyer and investor the opportunity and sufficient time to think about the purchase option away from the enthusiasm that appears in regular auctions. It also allows him time to consult with experts and specialists without any rush or risk. One of the benefits of the electronic auction is that the investor can study the properties offered and examine them from all aspects without pressure.
Al-Aidaroos stated that there have been regular auctions where prices were often inflated, becoming more like a competition between buyers bidding at unrealistic and illogical prices. He praised the first auction, noting that the site had been thoroughly studied, including land division, construction costs, and post-construction sale and rental prices. He emphasized that this does not mean abandoning regular auctions, as they too have their dedicated participants who are skilled in organizing and marketing them effectively and fairly.
Sulaiman Al-Fawzan: Freezing funds affects real estate developers
Real estate expert Suleiman Saleh Al-Fawzan, CEO of Kanf Real Estate Company, believes that the four-day waiting period for the auction to end is considered too long by real estate professionals. He expects it to be reduced to 24 hours so that investors don't hold onto their money, as this method may not be beneficial for them. Al-Fawzan added that investors who are aware and have large sums of money (30-40 million riyals) are always looking for undeveloped land or a distinctive commercial building, and they usually spend a long time negotiating. This is part of holding onto liquidity, and they may not succeed in buying. Therefore, they see auctions as providing them with valuable opportunities, as a businessman can buy at a lower price than the set price and can invest the remainder in another property or other benefit. Therefore, businessmen prefer to buy from auctions because of the variety of opportunities they offer, and this is another positive advantage, in addition to avoiding the greed of the market and negotiations with owners that may take a long time.
Mohammed Al-Ruqi: The buyer is the beneficiary in all cases.
For his part, Mohammed Dakhilallah Al-Ruqi, CEO of Al-Wusool Real Estate Company, praised the idea of holding real estate auctions, explaining that the buyer and investor are always the beneficiaries because they buy between the minimum and maximum prices, and there will be no potential loss for them. However, if a purchase is made at a price higher than the market price, the buyer either lacks sufficient and appropriate knowledge about the area and its prices, or they bought without considering the risks that may result from this type of purchase, which is an uncertain gamble. Or, the buyer might have a strategic view based on the understanding that prices in this area will rise over the next five years. Another important aspect is that the enforcement court will be bound by the lowest appraised price.
Sultan Al-Otaibi: Buyers are limited in any case
For his part, Sultan Hamad Al-Otaibi, CEO of Mudawla Real Estate Company, affirmed that electronic auctions will be a great success and will lead the real estate scene, despite the presence of some opponents who want to undermine them by creating hostile initiatives against them. Al-Otaibi stated that the number of bidders usually does not exceed 100 people, and all of them are working in the real estate market. He stressed that in any case, if the bidding is done remotely or via microphone, we will find that the number of buyers is very limited. Finally, we must know that everyone who enters the bidding will be aware of the item they want and its price (only a market expert enters the auction).
Related topics: Real estate – International trade – Real estate sector – Residential villas – Licenses – Loans – Residential plans – National campaign – Real estate auctions
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