When it comes to selling commercial property, the auction platform offers a dynamic and efficient alternative to traditional brokerage. At In2assets, we pride ourselves on maximizing value for our clients’ states Rainer Stenzhorn marketing manager at In2assets property specialists. A critical, yet often misunderstood, element in this process is the valuation and the subsequent reserve price.
The Cornerstone: A Realistic Valuation
Before any property goes live on The In2assets Property auction platform, a thorough and professional valuation is paramount. This isn't just a formality; it's the bedrock upon which a successful auction is built.
A realistic valuation, conducted by experienced property professionals, considers a multitude of factors:
- Market Conditions: Current supply and demand, economic indicators, interest rates.
- Property Specifics: Location, size, condition, zoning, features, and potential for development or refurbishment.
- Comparable Sales: Recent transactions of similar properties in the area.
- Potential Income: For investment properties, analysis of current and projected rental income.
- Current Income: Income guides value
This comprehensive assessment helps establish a true market value, which then informs the setting of a realistic reserve price. A reserve price that is too high can deter bidders, leading to an unsold property. Conversely, one that is too low might undervalue the asset. The goal is to set a price that attracts genuine interest while protecting the property’s value.
The Auction Advantage: The Unrevealed Reserve Price
This is where the auction model, particularly as practiced by In2assets, significantly diverges from conventional brokerage. In a traditional sale, the asking price is openly advertised, often becoming a negotiation starting point. At In2assets auctions, the reserve price is never revealed.
Why the Secrecy?
- Fosters Competitive Bidding: The undisclosed reserve encourages bidders to compete against each other based on their perceived value of the property, rather than simply offering just above a known minimum. This competitive environment often drives the price upwards, sometimes exceeding initial expectations.
- Prevents Low-Balling: If the reserve were known, potential buyers might strategically bid just enough to meet it, limiting the property's true market potential. Secrecy ensures that bidders must put their best foot forward to secure the asset.
- Allows the Market to Determine True Value: Auctions are powerful price discovery mechanisms. By not disclosing the reserve, the market, through the collective bids of interested parties, ultimately determines the property's true value on the day. This can often lead to a more accurate and higher selling price than a fixed asking price might achieve.
- Maintains Momentum and Excitement: The element of the unknown adds to the excitement and urgency of the auction process. Bidders are focused on securing the property, not on a pre-set threshold.
Transparent Process, Strategic Outcome
At In2Assets, while the reserve price remains confidential, our process is entirely transparent. Sellers are fully informed of the valuation and the agreed-upon reserve. Our role is to leverage our expertise to attract the right buyers and create an environment where the market can deliver the best possible outcome explains Stenzhorn further
The valuation is the unseen foundation, providing the confidence to set a realistic reserve. The undisclosed reserve is the strategic tool that unlocks the full power of the auction, ensuring that premium industrial assets find their true market value. It's a testament to the efficiency and effectiveness of the auction method in today's commercial property landscape ends Stenzhorn his explanations.
