If you have already participated in an auction, then you surely know the excitement and anxiety before the opening of the envelopes. Someone would be willing even to pay to know the identity and number of the participants.
But is it possible to predict it?
I mean, is it possible to precisely assess the appeal of a building? To know whether the auction is “well-attended” or whether you are alone, thus avoiding wasting time and get frustrated. Or whether you are not alone, otherwise you are seized with doubts about what you are purchasing…
The answer is no.
Too many variables are involved: the number of visits, the occupants, the assessments, the style of the building, etc. In my opinion, the decisive factor for the definition of the unpredictable is emotionality. The same emotionality that drives us to buy a house, with a touch of excitement and risk.
Emotionality leads the property prices to double during an auction. It happened to us as well, a building was initially assessed at 70 and was eventually assigned at 130. This is fool, especially if we think that at the starting price (100), the winner might be alone…In other cases, where the involvement of many people and the rise of the price seemed evident, the auction then has turned out to be empty.
The enhancement of non-performing loans does not mean crossing one’s fingers in the hope of a successful assignment. It means acting proactively to maximize the assignment opportunities by intervening in the processes of visibility and presentation of the guarantee asset.
The most important elements are the purchase price of the loan and the proper assessment of the potential of the asset.
If we are not satisfied with the irrational mechanism of the auctions, we may ultimately take part in the auction to protect our loans.