How to prepare for a commercial property auction
Property auctions are an efficient means of selling commercial property, but they do require knowledge and preparation beforehand – from both buyers and sellers alike – in order to reap the maximum benefits.
A lack of preparation and understanding at a commercial property auction can have unpleasant consequences for the inexperienced. Nevertheless it is quite possible that a commercial auction will ensure that you receive the best price for your property, or help you to find a real bargain.
What makes a commercial property auction unique?
Most properties sold for auction are those that would not command a high price when sold in the traditional manner. If you have a property that needs extensive refurbishment, it will almost certainly fetch a better price at auction than it would on the commercial housing market.
It is also beneficial to hold an auction for properties that are hard to value, due to their uniqueness. A standard estate agent may not be capable of assessing the full merits of your property.
In situations like this, an auction can provide an opportunity for specialists from commercial fields to come together and judge the property on the qualities that they know best, providing a good outcome for both buyer and seller.
It is typically more common for business owners to want to renovate a property than residential buyers. Due to the highly specialised needs of certain businesses, commercial auctions are an excellent opportunity for business owners.
Auctions are also a remarkably fast way to sell property. The buyer is obliged to pay 10% of the property’s value upfront and has a month to pay the remaining monies. This eliminates lengthy communications between estate agents and solicitors.
What are the advantages & disadvantages of buying or selling at a commercial property auction?
There are many obvious advantages to buying and selling property through a commercial auction. However, there are also disadvantages to be considered.
Commercial auction advantages for the buyer
- Experienced property buyers can find property at a price they can capitalise upon
- Buyers looking to buy property to renovate are likely to find something that suits them
- As all potential buyers must register to attend an auction, competition is likely to be smaller than on the traditional housing market
Commercial auction disadvantages for the buyer
- The process of a commercial auction can be adrenaline-fuelled – ensure that you have another person, especially one skilled at bidding, to stop you from making a costly impulse buy
- Once the auctioneer drops the gavel, you can’t change your mind about the property – should you try to withdraw from the sale, the seller can sue for the full sale price
- Commercial auction advantages for the seller
- If you need to sell your property quickly, a commercial auction is the ideal way to do it
- As commercial auctioneering is a competitive process, the chance of getting a good price for your property is increased as buyers seek to outbid each other
Commercial auction disadvantages for the seller
- The fees of auctioning your commercial property are likely to be higher than those of selling a property traditionally through an estate agent
- There is no guarantee that your property will sell at auction
- You may not be entirely satisfied with the price your property reaches and once the auction is in process you have no control over this
How to prepare to buy or sell property at commercial auction
Before you buy or sell property at commercial auction, there are a few factors to take into consideration:
- Prior to the auction, if you are selling make sure that you market your property well
- If you are buying, make sure that you visit the property you are interested in beforehand
- Contact the professionals – commercial auctioneers or commercial surveyors will be able to give you an idea of the value of a property
- Bear in mind that once the property is sold at auction, both the buyer and the seller are legally obliged to go through with the sale. Any qualms that either party might have are irrelevant
For advice on purchasing or selling commercial property at auction, get in touch with our team who will be happy to advise and assist you.