Dutch auctions on Prozorro.Sale: how step-by-step price reduction works

A regular auction is ascending: bidders outbid each other. A Dutch auction works the other way round: the price starts high and drops automatically step by step until one of the bidders agrees to buy. On Prozorro.Sale this is often how property is sold when a regular sale has failed.

Where Dutch auctions occur

Our database has almost 1,800 such lots. Most of them are in bankruptcy sales and sales of state company assets, followed by small privatization, state property lease and bank assets (DGF). A Dutch auction is usually not the first attempt: the property is first offered at a regular auction, and if that fails — at an auction with price reduction.

How the price drops

Every Dutch lot has two parameters, both stated in the announcement:

• the reduction step — almost always 1% of the starting price (1,794 of 1,796 lots in our database; rarely 0.1% with hundreds of steps);
• the number of steps — set by the organizer, usually from a few up to 99.

Hence the maximum discount: number of steps × step. For example, small privatization most often uses 50 steps — the price can halve; bankruptcy and state property lease sometimes use 99 steps — in theory the property can then be bought for 1% of the starting price. But waiting until the end is risky: someone else may stop the reduction earlier.

Auction stages

On Prozorro.Sale a Dutch auction usually has several stages:

1. Automatic reduction. The price falls by one step at regular intervals. The first bidder to accept the current price stops the reduction.
2. Sealed bids. Other bidders may offer a higher price without seeing each other’s offers.
3. Final bid. The bidder who stopped the reduction may beat the best sealed bid.

The winner is whoever ends up with the highest price. The exact procedure and duration of the stages are in the lot announcement and the marketplace rules — read them before the auction.

Bidder strategy

• Set your limits in advance — the price you will not go above and the price at which you are ready to stop the reduction.
• Stopping early gives you a chance at the property, but others can still outbid you in the sealed-bid stage. Waiting long is cheaper but risks being beaten to it.
• The guarantee deposit is calculated from the starting price, so for a Dutch auction it is usually lower than at the first sale attempt.
• A discount does not mean a bargain: the property may have gone unsold because of its condition or encumbrances. Check the documents and inspect it.

How to find such lots

On the lot page the auction type is shown as a Dutch (descending) auction, the “Price reduction” row shows how far the price can drop and the lowest possible price, and the “Previous auctions of this asset” block shows how many times it has already been offered. More on repeat sales in our guide to repeat auctions.

Dutch auctions currently accepting applications

To catch a property that has moved to a price-reduction auction, save a filter by type, region and keywords — the radar will message you in Telegram as soon as such a lot appears.

This is an overview for orientation, not legal advice. The binding terms of each auction are in its announcement and documents on prozorro.sale.