How to sell Commercial Property at an Auction and what you should be aware of if you do
In this article we will explore the process of selling commercial property at an auction and pros and cons of doing so.
Following on from our previous article on Buying Commercial Property at auction here are the main reasons why you should consider selling at auction:
Time of Completion
Selling property at an auction saves painstaking time that property transactions are usually subject to. In as little as six weeks you could be in receipt of funds. For sellers who are looking to make a quick sale for whatever reason, this may be the most suitable method.
Auctioneers and auction houses have a vast wealth of experience in providing your commercial property the best exposure prior to the auction occurring. From putting out adverts in local and national press, auctioneers will have close contact with private investors of which the commercial property will likely be interested to them. The benefit of this means that even before the auction opens, you could have a number of interested parties ready to make a deal on the day!
The benefit of an auction is that the process is a walking advert for your commercial property. This means that even if it does not get sold at the first auction it is likely to be sold soon after either by way of a private deal or a further round of auctioning. A bidding war will essentially allow you to recover as close to mark price as achievable.
As a matter of common law, a sale at an auction (i.e. the fall of the hammer) places a binding legal duty on the bidder to complete the purchase. This gives the seller the certainty that the sale will complete, and contracts are exchanged immediately. The speed of auction provides security in knowing completion usually follows within 28 days.
While the benefits of selling commercial property at auction are clear to see this is not to say there is not an element of risk at selling at auction. There are 2 key main drawbacks of selling at auction:
Any goods sold at auction will have its reserve price, at which the auction will not go below. However, due to the nature and volatility of an auction there is no guarantee of getting the price you envision. It is therefore important to understand what you reserve price should be and that it could potentially be sold only at that price.
There will two main types of fees you should be aware of when it comes to selling commercial property at Auctions.
Auctioneers will usually take a fixed percentage of the sale price on a successful auction. You should be sure that you know this fixed percentage from the beginning to avoid any surprises on completion.
Auctions will usually have an entry fee to cover their general costs. This fee is applicable even if your property does not get sold so be sure to account for these costs when setting a reserve price.
At Carter Bond Solicitors we understand that choosing the most appropriate method of disposing of property can often be taxing and confusing. Speak to our team today to see if we can assist you with your commercial property sale.
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