Selling Commercial Property at Auction – Are There Any Special Considerations?

Commercial property owners often choose to sell at auction, with benefits such as greater certainty of a speedy sale, the opportunity to achieve a favourable price due to competitive bidding, and a larger pool of interested buyers than they might find elsewhere.

The commercial auction property market is robust and continues to grow – and may be a great option if you’re keen to move quickly, need to sell a property to raise capital, or wish to sell an existing facility or rental unit to further your business plans.

For those new to commercial property auctions or unsure of how the process may differ from an auction sale of a residential home, we explain some of the important considerations and variances to be aware of when selling a commercial property at auction.

Looking to sell your commercial property? Let us know your commercial property details and we’ll send you a FREE valuation. 

Why Sell a Commercial Property at Auction?

We’ve listed a few of the primary benefits here, but the biggest positive is that commercial property sales are faster via auction, especially for larger premises or desirable business structures that will command a reasonably high value.

Although commercial properties can be sold through a conventional sale process, the reality is that the sales routes available are somewhat limited, and unusual business premises may not be aligned with the budgets and expectations of local buyers and entrepreneurs.

Interest in commercial auctions has grown rapidly because anybody can bid once they have registered with the Clive Emson team and had their credentials verified. Therefore, rather than marketing a commercial premise purely to local businesses, you will attract interest from:

• Professional landlords
• Pension Funds
• Real estate investors
• Public sector and business federations
• Nationally trading companies
• Developers
• Expanding local organisations
• Private Investors

This diverse buyer audience means that even unusual sites, empty plots of commercial land or buildings in need of renovation and modernisation can sell well, where investors can see the potential and the future appreciation in the value of the lot.

Auction sales are quick and transparent, which means the sale concludes as soon as the auctioneer closes bids, with very little risk that the transaction will fall through, along with the assurity of proving market value.

What Property Types Can I Sell at a Commercial Auction?

Any property can be sold at auction but your solicitor will need to provide a legal pack which will need to be made available for potential buyers to read in advance of the Clive Emson auctionl.

We facilitate commercial property sales across a huge scope of property types, including:

• Restaurants, hotels and pubs.
• Office buildings and entire blocks.
• Business parks and shopping centres.
• Warehouses, industrial units and factories.
• Plots of land and development lots.
• Properties in industrial estates, town centres and rural locations.

The seller is normally the freehold owner and the sale comprises the property or plot of land itself rather than the business as a going concern.

How Does a Commercial Property Auction Work?

The first step to selling a commercial property is to contact the auction team and arrange a convenient time to inspect the property with the auctioneer. Experienced auctioneers have years of knowledge about the prices properties sell for and can offer insights to help you set a reserve price – the minimum the property will be sold for – which will meet your expectations.

Guide prices are displayed with the property particulars and should be set carefully to generate interest without representing a value that is lower than you would accept.

After selecting your pricing, the auction team will work through a few steps with you:

• Issuing an agency agreement that sets out the terms and conditions of the auction sale and how the auctioneer will represent your interests as a seller.
• Arranging property inspections, drafting the sale particulars including walk-through videos, floorplans, location details and high-quality photography.
• Progressing the documentation required from your solicitor for the sale including ownership deeds, survey results, energy performance certificates and any other relevant paperwork.
• Marketing the property, typically over a three to four-week period, advertising the property to engage with interested buyers.

You can read more about how a property auction works here. 

Once the auction day arrives, you can choose to sit in on the process, with visibility of the latest bids made, along with the final price.

When the auction concludes, contracts are exchanged and the highest bidder remits a deposit straight away and then usually has 20 working days to pay the full balance.

Are There Any Risks of Selling a Commercial Property Through an Auction?

Professionally managed auction sales are low-risk, and the support and assistance from the auctioneer make it unlikely you will experience any problems or delays – the process is straightforward and provides a convenient sale experience.

However, there are some possible setbacks you may need to be aware of, such as the risk that, on the day, your property does not receive a bid at or above the reserve price. However, the auctioneer will make contact with all interested parties in order to try and achieve a sale at an acceptable for all concerned

Related reading: What happens if a property doesn’t sell at auction?

Specifics to Consider When Listing a Commercial Property for Auction Sale

If you are selling a rental investment property with sitting tenants or a commercial unit with business tenants, you must detail the rental or lease agreement terms with the sale documentation, including a copy of the lease contract for prospective buyers to review.

It may also be necessary to include additional documents such as planning permission secured against the site, any possible issues such as being on a flood plain, business rates payable, and service charges linked with commercial properties on serviced industrial estates.

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