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The Amsterdam Real Estate Auction has been around since the mid-1800s. The old auction catalogues from 1860 (remembered by many as the ‘green booklets’) show that not much has changed in 150 years: even the layout of the auction catalogues and auction notices remain the same. Almost all Amsterdam residents will be familiar with the auction boards put up on real estate to be auctioned. The First Amsterdam Real Estate Auction believes it’s important to preserve both the riches of the past and those of the present, a unique combination!
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The buyer pays the auction house fee, UNLESS the seller has agreed to pay this. This fee includes all of the following expenses: the organization of the auction, inclusion in the weekly auction house advertisement (in Het Parool), the auctioneer’s commission, rental of the room, printing and posting of the auction notices and boards, inclusion in the auction catalogue and placement on the website (mva.nl/veiling).
The auction house fee is €1,500, exclusive of VAT, for purchase prices up to and including €525,000 (for the entire list of fees, check out the website).
If a real estate agent has been engaged by the buyer, the buyer must also pay this agent a commission. The amount of this commission is agreed on by the two parties themselves, as it is not subject to regulation. The buyer will have to pay the civil-law notary’s fee and transfer tax as well.
All in all, the auction fees in Amsterdam are lower than the average private purchase-sale fees. Once again, this is unique!
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History has also determined how the auction is conducted. The buildings are sold by bidding and by Dutch auction at one and the same session. The purchase and sale may be effectuated not only by real estate agents who are members of the Amsterdam Association of Real Estate Agents (Makelaarsvereniging Amsterdam) but by others (private individuals, lending institutions, etc.) too. These are just some of the aspects which set the picture for the auction. The auction is held, on average, 30 Monday evenings a year in the Felix Meritis Building at Keizersgracht 324 in Amsterdam. Anyone who’s ever visited an auction knows that the ambience and large number of visitors make for a lively atmosphere and creates a certain degree of excitement. The building comes up for auction. The auctioneer bangs the cymbal, and asks the audience, “Who wants to start the bidding?”, after which the bidding begins. The highest bidder is the provisional buyer (with ‘provisional’ meaning ‘only for the time being’ here). This bidder receives the ‘plokpenning’, that is, the premium offered to the person making the highest bid. He then signs the official report of the auction, and the Dutch auction of the parcel can now commence.
Suppose that the highest bid is €135,000. At the Dutch auction, an extra sum, say €90,000, is asked on top of this, and the countdown system begins. It stops when someone calls out “mine!”. So if somebody in the room shouts “mine” at €5,000, then the building will be sold for €135,000 + €5,000 = €140,000. If no one calls out “mine”, the highest bidder (the provisional buyer) will be the definitive buyer. This system of bidding and Dutch auction is also referred to as the ‘Amsterdam system’, since it’s different from the national system. It’s unique!
If you prefer to stay at home, you can also follow the auction via the Internet, through the live stream starting each auction evening at 6.00 p.m. (to log in, see our website www.mva.nl/veiling).
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In the last 10 years (2001 – 2010), 400 parcels were on average auctioned each year, with an average total return of more than €142 million a year. 2008 was a peak year: 485 buildings were auctioned, with a total return of €232 million. The fixed frequency with which auctions are conducted – almost weekly, except for the summer break in the months of July and August – as well as the aspects mentioned above, make the auction such a powerful instrument and provide both the buyer and seller with the necessary security and protection. Each week an auction catalogue is published, containing all the relevant information about the upcoming auctions and the parcels put up for auction. The catalogue is now in its 150th year of publication. Another aspect which makes the Amsterdam auction unique! The latest details can be found on the Internet each day at http://www.mva.nl/veiling.
For anyone interested in the Amsterdam real estate market, the First Amsterdam Real Estate Auction is an indispensable source of information. If this article has whetted your interest, don’t hesitate to stop by and see the auction. You’ll then be able to state from your own firsthand experience: The First Amsterdam Real Estate Auction is really unique!
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The real Estate agent and the First Amsterdam Real Estate Auction | |
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These two parties are inextricably intertwined with each other. The Amsterdam auction could not exist without the agents (members of the Amsterdam Association of Real Estate Agents), and the auction is a very important tool for the agents in providing their services. From the seller’s perspective, the sale must result in the highest possible return, and he needs to know that his real estate will be sold. There may be many reasons for an agent to advise the owner to auction the property. Practice shows that all kinds of real estate (investment properties, corporate buildings, vacated houses, apartment rights and so forth) always manage to find a new owner at an auction.
The average returns achieved at auctions justify the notion that these are often higher than those achieved in the private market!
Although a seller can also auction his property himself, a seller is well-advised to call in an expert for assistance. A real estate agent will examine all the information relevant to the parcel to be auctioned, advise the owner on the proceeds which can be expected and set the auction date in consultation with the civil-law notary. The wheels of the First Amsterdam Real Estate Auction are then set in motion. Auction notices will be printed, auction boards will be put up, the property will be included in the auction catalogue and an advertisement will be placed. When the auction evening comes, the seller or his agent will be sitting in the ‘box’ next to the auctioneer and the civil-law notary, and the bidding and Dutch auction can begin.
The buyer can act independently at the auction, too, but he must provide the necessary security in this regard; for instance, he must furnish proof of his identity and, at the time of purchase, submit a bank guarantee equivalent to 10% of the purchase price. Yet it also makes sense for a buyer to engage an agent, for purchasing real estate is no easy task. Many issues can crop up. Has a notice been issued regarding the property? What’s the designated use for it? Is it a listed building? Are there any technical defects? And, last but not least, what’s the value of the property? The agent can inform the buyer about and advise him on all these aspects. If the buyer then decides to purchase the property, the agent together with the buyer will stipulate the highest price which may be bid at the auction on the buyer’s behalf. ‘Auction psychosis’ is another important concern. The agent has lots of experience with auctions and won’t let the audience force up his bidding. In other words, he won’t be tempted to make bids exceeding the highest bid he has in mind.
By utilizing real estate agents, private buyers will be protected against this ‘psychosis’, which all too often rears its head at other types of auctions. Using an agent at the First Amsterdam Real Estate Auction also affords the seller the necessary security. Under the General Auction Terms Amsterdam, the agent is jointly and severally liable on behalf of his commissioning party for fulfilment of the obligations of the buyer at the auction. Thus, if the commissioning party leaves the agent in the lurch (that is, doesn’t buy the property), the agent will have to pay the entire purchase price and will be regarded as the buyer in that case. And that is yet another way in which the First Amsterdam Real Estate Auction is unique!
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