Auctions lead commercial property sales

Posted On Monday, 18 February 2013 12:53 Published by Commercial Property Auctions
Rate this item
(0 votes)

Property auctions are on the increase due to the fact that the price of property achieved at auctions is a real-time and true barometer of current market values.

Commercial Property AuctionsOver the last 5 years, auctions have become a popular way of buying and selling commercial properties, not only by private investors, financial institutions but also large institutional owners and funds. It seems the perception that auctions suited distressed properties and fringe stock is being replaced by that of quality stock.

From a seller's perspective, knowing there is a time limit on selling negotiations is key; it can create more impetus and urgency from prospective buyers if there is a good chance the property is in high demand, which may be a great means of driving up the price. Further, there is no ceiling price, there is an opportunity to achieve a price well above expectations.

Buyers need to be educated on auction costs and the contracts. Successful bidder is legally bound by auction terms on the fall of the hammer. It is important to have sourced finance before the auction, else buyer may be responsible for remarketing and shortfalls in resale price.

Significant events of 2012 highlighted the importance of regulation of this fast growing sector which should protect sellers and buyers and mend the image of this sale method.

Whilst many would argue that auctions are the best way to secure the highest sale price for your property given the competitive nature of buyers on the day, others believe private sale is still the way to go. Nonetheless, the price achieved at auctions versus set market value will ultimately dictate which method is the future.

Tips for a successful auction (buyers and sellers)

  • Selecting an auctioneer. The auctioneer will play a key role in the success of your sale. Find out about the Auctioneer’s strategies to maximise the best price for your property
  • Registering. When registering as a buyer, ask for a copy of the Conditions of Sale and ensure that they are familiar with the contents.
  • Finance. Buyers should make financial arrangements prior to the auction sale.
  • Viewing. Make good use of viewing days and inspect the property fully before the sale commences.
  • Setting a reserve price; Settle on a reserve price, the lowest price you are willing to accept
  • Contracts. It is important to make sure you have the contract, this way you will have everything prepared in advance, and not have to stress over these details in the days leading up to the auction.
  • Market value: buyer. Buyers need to set purchase limits taking into account all costs of the auction. What is the property worth, and what condition is it in?
  • Accepting market value. Be prepared to accept the market value on auction day, provided there has been competitive bidding between multiple bidders. Sometimes auctions achieve results lower than your expectations as a result of market conditions, and this is why you need to properly plan your reserve price.

eProp would like to acknowledge the pivotal role Auction Alliance played in changing perceptions and developing Auctions as one of the preferred methods of commercial property sale. 

Last modified on Sunday, 09 June 2013 21:47

Most Popular

The next wave of property development in Africa is coming

Jul 31, 2019
 NIYI ADELEYE
The past decade has seen South African property developers and investors forge their way…

SA focused REIT Dipula makes bid merge with SA corporate real estate

Jul 31, 2019
 IZAK PETERSEN
Dipula Income Fund, a diversified, South-African focused and Black-managed REIT, today…

Vukile’s Spanish assets top €1bn, and it gets a credit ratings upgrade

Aug 02, 2019
 LAURENCE RAPP VUKILE
Vukile Property Fund today announced that its listed Spanish subsidiary, Castellana…

Growthpoint Investec African Properties steps up its acquisition trail in Africa

Aug 06, 2019
 THOMAS REILLY
Growthpoint Investec African Properties (GIAP), the pan-African real estate investment…

Credit and mortgage balances in the first half of 2019

Jul 31, 2019
Jacques Du Toit Absa Home Loans
Credit and mortgage balances in the first half of 2019, with divergent home loan…

Please publish modules in offcanvas position.