The COVID-19 pandemic took a massive toll on communities across the United States. With a steep decline in revenue, local governments across the country are considering new ways to boost their funds to pre-lockdown levels. Meanwhile, while government revenue sharply declined across the country, property vacancy rates have simultaneously spiked in many municipalities nationwide. Other municipalities have been dealing with an excess of vacant properties for decades which have been a drag on municipal budgets and property values.
Government real estate auctions offer the ability to help local officials recuperate lost funds from the pandemic and to reduce and manage foreclosed and vacant properties across their communities.
While in the past, in-person auction events have been a staple for many local governments, challenges posed by COVID-19 have made it difficult to host real estate auctions face-to-face. Fortunately, governments can leverage the power of online, digital real estate auctions to boost revenue and sell off vacant properties reaching vastly more participants than pre-pandemic levels.
But how can a local government get going with online auctions? Figuring out the logistics of hosting digital events can be challenging after years of in-person auctions.
Good thing we know how to make it happen! Learn more about the many benefits of digital auction formats, and how your local or city government can effectively make the digital format a reality that can be replicated as needed.
How Have Government Auctions Worked In the Past?
Before COVID, local governments would typically host real estate auctions in-person, typically indoors in an auditorium or hotel ballroom.
Even before lockdowns, in-person auctions were limiting. Often auction attendance would have to be capped off in order to meet fire-safety capacities. In other cases, there was a lack of equal opportunity for those who were unable to take time off or travel to attend in-person.
Now, as we continue to social distance and limit occupancy indoors, in-person real estate auctions are even more limiting, and many potential buyers are turned away or unable to attend.
What Are the Benefits of Online Real Estate Auctions?
With innovative software to accommodate online events and enable significantly higher participation, in-person real estate auctions are becoming a thing of the past.
Below are some of the ways that online real estate auction services can help your local municipality.
1. Increased Auction Participation
No longer are governments required to cap the number of attendees per auction. With an online auction format, there’s no limit as to how many people can turn out and partake, and potential buyers that may not have been able to attend in-person can now join from their laptops.
More participants means more bids per property, and that translates into higher final sales amounts and more revenue for the local government.
Even when the pandemic comes to an end, why settle for less attendees just to meet fire-code standards?
2. Increased Government Revenues
More accessibility for auction attendance comes with more potential buyers! And, as more bidders compete for vacant properties, local governments should see an uptick in sales prices.
More properties sold at higher prices means that local governments can expect some serious revenue. Trenton, NJ for example, was able to sell 49 properties in a single day with an online auction, garnering the city $4.15 million in revenue.
Pair that kind-of revenue with Federal relief provided by the American Rescue Plan, and your local government can expect pre-COVID levels of cash on-hand.
With a digital auction format all bids are time stamped and can be reviewed after the auction if need be, and all sales paperwork can be automatically generated by the platform software, saving local government staff an enormous amount of time and effort.
3. Decrease in Vacant Properties
Along with additional revenue for the government, reducing vacancies in your neighborhoods is a win for everyone. Too many storefronts and homes across the country are sitting completely empty, and many of the previous owners have likely left the community entirely.
Auctioning off vacant properties will encourage new residential and commercial property ownership in the community, bringing in more economic opportunity, rehabilitating properties in disrepair, and increasing property values municipality-wide.
4. Neighborhood Revitalization
An increase in funds for the government and an influx of property-buyers can revitalize the neighborhood in a variety of ways:
- Infrastructure updates: with more funds in the bank, the local government can allocate funds to address and update antiquated physical infrastructure and their digital IT infrastructure. Local officials can not only get those nasty pot holes filled on Main Street, but can also move towards a full digital transformation.
- Encouraging Property Ownership: Easy access to, and participation in local auctions means that more area residents will be inclined to become first-time home buyers or own the property in which their business operates. Creating opportunities for owner-occupied commercial and residential properties is a terrific way to reinvigorate neighborhoods and the tax base, as property owners who live or work in their properties are more likely to care about their property and neighborhood on a day-to-day basis than outside investors.
- Economic Development: With new constituents and businesses moving into their recently purchased properties, neighborhood revitalization will result as more money is spent locally within the community. Over the long-term healthy neighborhoods with occupied properties will create economic opportunity for residents and the government alike.
- Reduced Crime Rates: By making owner-occupied property ownership opportunities available to constituents, they become quite literally invested in the health, safety, and viability of the neighborhoods and communities in which they live and operate businesses. Economic development increases desirability and property values in your community benefiting those who own property, local businesses, and the government’s tax base. Properties once vacant are repaired and maintained, eliminating blight and overgrowth. Upgrades to digital IT infrastructure resulting in broadband access make it easier for constituents to report concerns to the local officials. The data shows that both of these things result in a significant decline in criminality as vacant properties are developed into occupied homes and businesses.
- Increased Civic Engagement: With government revenue invested in updating IT infrastructure and improvements in the community, and new community property-owners eager to call their new neighborhood home, your community is ripe for an uptick in civic engagement and increasingly seen as a great place to live and work.
How Can Local Governments Set-Up Online Real Estate Auctions?
With free real estate auction software, local governments can simply sign-up for a free consultation and get started planning their first digital event.
To make things even easier, GovPilot is committed to providing local governments with end-to-end instructions on listing, hosting, and advertising their online real estate events.
Additionally, we will distribute a press release to local media in your area and deploy our social media marketing expertise to help you successfully promote your digital auction to your local and regional community.
Once an auction is launched, here are the benefits for participants eager to bid on property:
- Straightforward online refundable deposit payment to reserve participation
- Digital payment approach that sends reimbursable registration money straight from participating bidders to the local government.
- Images of each property on display.
- GIS mapping that shows constituents the exact locations of the properties
- Display of property assessment values and market values based on extensive data analytics. The Automated Valuation Model (AVM) can show a bidder the selling price of comparable properties over a selected period of time, making bidders more informed and likely to place a competitive bid.
- Automated system that generates necessary sale documents, reducing the amount of work required by local government employees and speeding time to closure.
Overall, the benefits to moving government real estate auctions to a digital format are clear. The Mayor of Trenton, New Jersey summed it up nicely when he said, “To be able to host a successful online, socially distanced real estate auction in the midst of the COVID-19 pandemic was tremendous. The opportunities created for our residents, and the revenue generated for our budget will support constituent services and the continued revitalization of the city, and with the 5-year residency requirement for many of these properties, we know they will be cared for by Trentonians who are proud to finally own a stake in their hometown.”
The opportunity to revitalize communities, encourage property ownership, and provide the local government with an influx of revenue are massive.
Schedule time to learn how to create economic opportunity for residents and generate revenue for your local government with GovPilot’s online real estate auction services.
Online Real Estate Auctions FAQs
1. What is an online real estate auction?
Local governments often own properties that they are responsible for managing and maintaining whether they are residential, commercial, or governmental. These properties represent a potential revenue source for the local government. Traditionally in-person auction events have been a staple for many local governments, but challenges posed by COVID-19 have made it difficult to host real estate auctions face-to-face. Fortunately, governments can leverage the power of online, digital real estate auctions to boost revenue and sell off vacant properties reaching vastly more participants than pre-pandemic levels.
2. What are the benefits of online real estate auctions?
Online real estate auctions have many benefits including increased participation as attendees are not limited by a physical room size, and do not need to travel to a physical location to place bids. This leads to more competitive bids and greater revenue generated for the government per sale. Real estate sales to local residents increases economic opportunities, while reducing blight, vacant properties, and crime. All of this creates a more stable and sizable tax base for the local government over the long term.
3. Are GovPilot’s Online Auction Services free?
Yes! GovPilot provides end-to-end online auction services including marketing and promotion, auction hosting, and form generation at no cost to local governments and sheriffs departments.