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Reasons for buying and selling properties at commercial auctions vary. Although, no matter your “why” one thing is always certain – the sale. Whether you are looking to dispose of distressed assets, properties that just seem not to want to sell, or simply need to get rid of assets quickly, commercial auctions are a highly successful platform. Auctions allow you to easily generate high exposure for a quick sale. The main reason commercial auctions are successful is that they connect serious buyers with serious sellers in a controlled and fair environment. Overall, this leads to a guaranteed closing at fair market value – a win, win for all parties involved.
While commercial auctions are exciting, there are often a lot of questions that come along with them. Below, we outline the benefits of buying or selling assets at commercial auctions. We will also provide information on who would do best to use them. If you still have questions after reading, go ahead and give us a shout!
To begin, the benefits of a commercial auction are endless and the positives depend on whom you ask. Below we outline all the advantages of buying and selling commercial properties at auction, and who benefits from them most.
Benefits to Sellers
- Sale is accelerated. Which reduces long-term carrying costs (including taxes and maintenance) and ensures the seller as to exactly when the asset will be sold.
- Property is exposed to a very large pool of potential and pre-qualified buyer who are ready to purchase.
- Creates maximum competition among buyers. Creates a sense of urgency, which often leads to an auction price that exceeds that of a negotiated sale.
- Promise that the commercial property will sell at true market value.
- Quick (30-45 day), all cash closing.
- Saves time and hassle of numerous showings.
- Each of the properties are sold “as is”, removing the seller of any and all liabilities.
- All potential buyers are screened and pre-qualified.
Benefits to Buyers
- Get a deal on commercial investment as assets are bought at fair market value.
- Guaranteed closing, knowledge seller won’t back out.
- The buyer gets to determine the purchase price not the seller.
- Avoid lengthy and frustrating negotiation periods.
- Get comprehensive background property information. This includes all detailed due diligence information.
- Level playing field among all buyers, no preferential treatment or “under the table” deals, all terms are the same.
- Time to purchase property is drastically reduced.
Our friends at SVN Auction Services have a great list of exactly who benefits from commercial auctions, and how.
- Estates: Commercial auctions provide a fast and simple turnkey estate settlement. Real estate, furniture, cars, equipment and other assets can be sold in one auction. This eliminates the arduous task for family members.
- Brokers and Attorneys: If your clients have assets that simply are not selling, or you have clients that need to know the exact date of sale or are dealing with court-ordered sales, commercial auction is the platform for you.
- Developers: Commercial developers that have condominium or subdivision projects with many properties remaining can use commercial auctions as a great way to “cash out” and move forward to new projects.
- Banks (REO’s): If not sold in a quick timeframe, REO properties can become costly. Industry stats have shown that it costs about 2% of an asset’s value each month to properly maintain these properties.
- Closing Businesses: For companies who are closing their doors, commercial auctions are the perfect opportunity to “cash out”, selling their real estate, inventory and equipment.
- Trustees: There are many reasons why trustees would want to use commercial auction to sell assets. Including assurance of highest sale price, eliminating suspicions of impropriety and to stop holding costs.
In conclusion, you may have a few questions. Such as what is a “sealed bid” auction? Or “as is” condition? What is a “buyer’s premium? Perhaps my property doesn’t meet my minimum sale price at auction…what happens then?
While auctions are exciting and provide a guarantee sale, they also come with a lot of questions. If you are looking to purchase or sell commercial assets at auction, do yourself a favor and get all your questions answered PRIOR to the start of bidding. Reach out to one of our CRE professionals and be on your way to one heck of a real estate deal.
About Us – The team at SVN | Graham, Langlois & Legendre has over 99-years of combined experience helping clients across the Baton Rouge market get the most value out of their CRE investment. Contact one of our dedicated CRE professionals today with any questions you may have and start seeing the returns in a market that will make sure to give today, tomorrow and for the extended future. To reach us, you can call us at 225.367.1515 or you can send us a message on our website. You can also follow us on Twitter at @svngll or on Facebook.