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The Benefits And Risks Of Selling Commercial Property At Auction

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Ten-X Commercial
The Benefits And Risks Of Selling Commercial Property At Auction

Commercial property auctions have got a lot of benefits and some risks involved. It is therefore important to understand both the benefits and risks before you sell at auction.

Benefits of selling at auction

Selling property at auction is a popular method of sale. It can generate maximum exposure and provide the seller with good results. However, it is a different experience compared to selling by private treaty. It is also essential that you understand how the process works in order to make the right decision and enter your property into an auction.

Speed of transaction

Selling commercial property at auction is a simple and fast process as opposed to a private treaty. The whole process, from providing the auctioneer with the right details of the property to the completion of the process, can take just six weeks. This comes with clear benefits, especially in the case of sellers with a number of properties they wish to dispose of within a short period.

Exposure to the market

Another benefit of auctioneers is that they are experienced in marketing and provide your commercial property with the best exposure possible prior to the auction. Auctioneers advertise upcoming lots in the national, local and trade press alongside inclusion in the catalogue. A lot of auction houses have close contact with a lot of registered investors who are updated regularly on properties that are likely to interest them. Actively promoting their lots on a commercial property auctions app generates interest from businesses and investors looking for commercial properties on the internet.

Success rate

When you sell commercial property at an auction, you are provided with a great opportunity of achieving the best price. In addition, auctions provide a high sale rate and the lots that do not attract bidders on the day are sold afterwards.

Security and certainty

When you sell the property at auction, you are certain that the lot is sold. The buyer is legally bound to finalize the purchase and sign contracts immediately at this moment. The speed of the auction process also provides you with the security of knowing that the completion will follow in 28 days.

Now that we have discussed the benefits of selling property at auction, let us look at some of the risks involved.

Pricing

At the auction, your property will have a reserve price which it will not be sold. However, the market can be volatile and while the property bids may appear to be rising, this is because they started low. There is every chance of achieving the desired market price but you should always remember that there is no guarantee of your commercial property realizing the price you may be expecting.

Commission and fees

Commercial property auctions can provide a competitive option. However, auctioneers take a commission which is a certain percentage of the sale price of the property and you need to ensure that you are clear about the percentage they take. They will also charge you an auction entry fee that covers their costs and you need to know that this is payable even if the commercial property fails to reach your reserve price.

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