A property auction is an event where properties are sold through a bidding process, concluding the sale with the final drop of the Auctioneers hammer. While traditional sales methods remain common, more commercial property owners are recognizing the advantages of auctions.
But what are these advantages and why are commercial & industrial property owners choosing auctions as their preferred sale method ask Rainer Stenzhorn from In2assets.? Let's examine this further.
More Than Just a Sale: It's an Event
The first piece of the auction magic lies in its very nature: it's an event. Unlike a property listed quietly for months, an auction creates a focal point, a specific date and time when all interested parties must make their move. This generates:
- Urgency: Buyers know this is their best, and often only chance to secure the property. This eliminates procrastination and encourages decisive action.
- Excitement & Competition: The competitive bidding environment naturally drives up prices. Potential buyers, spurred by the presence of others, often stretch their budgets further than they might in a private negotiation.
- Transparency: Every bid is public, creating a clear and fair playing field. This transparency builds trust and confidence among bidders.
The Power Principles: Why Commercial Sellers Choose Auctions
For commercial property owners, the decision to go to auction is often strategic, driven by a desire to leverage specific market dynamics. Here's why the auction process holds such immense power for them:
- True Market Value Discovery – Without the Guesswork:
Forget endless negotiations and back-and-forth offers that might not reflect true market appetite. Auctions are the ultimate market-driven pricing mechanism. Buyers, in real-time, determine the property's true value, often exceeding seller expectations. This is particularly potent for unique or hard-to-value commercial assets where comparable sales are scarce.
- Expedited Sales Cycle – Time is Money:
Commercial property owners understand that time costs money. Vacant properties incur holding costs, and lengthy sales processes tie up capital. Auctions provide a defined, compressed timeline from marketing to sale, typically concluding within 30-45 days. This rapid turnaround allows owners to quickly re-deploy capital or exit investments efficiently.
- Maximum Exposure & Targeted Marketing:
A professional auction house doesn't just list a property; they launch a targeted, high-impact marketing campaign designed to reach a wide pool of qualified buyers. This often includes digital campaigns, industry-specific publications, and direct outreach to investors, ensuring the property gets seen by those with the means and desire to buy.
- Elimination of Contingencies & Uncertainty:
One of the biggest frustrations in traditional commercial sales are the myriad of "subject to" clauses – finance, due diligence, rezoning, etc. Auction terms typically require buyers to conduct their due diligence before the auction, and the sale is unconditional, with a deposit paid immediately. This provides commercial owners with unparalleled certainty of sale.
- Control Over the Sales Process:
While competitive, the seller maintains significant control. They set the terms and conditions of sale, including the reserve price (the minimum acceptable price, kept confidential), ensuring they won't sell below a pre-determined threshold.
- Uncovering Hidden Buyers:
Auctions have a remarkable ability to attract buyers who might not be actively looking but are drawn in by the event's excitement and the potential for a unique opportunity. This expands the buyer pool beyond those typically found through traditional listings.
The Unseen Hand of the Auctioneer
At the heart of this magic is the auctioneer – part conductor, part psychologist. Their skill lies not just in calling bids, but trading in reading the room, encouraging participation, and maintaining momentum, ensuring the property reaches its optimal price.
Is the Auction Block Your Next Strategic Move?
For commercial property owners looking to achieve true market value, accelerate their sales cycle, and minimise uncertainty, the "magic" of the auction is not an illusion. It's a powerful, transparent, and highly effective sales strategy that consistently delivers results ends Stenzhorn his comments.
If you're considering selling commercial property, it's worth exploring how the strategic power of an auction could unlock its full potential for you.
