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Tips for Auctioning a Commercial Property Today

City buildings on river

Even when the commercial property market is slow and difficult, there are certain advantages in the auction process that should not be overlooked or underestimated. The greatest advantage for all concerned is that the auction process gives momentum to the serious buyers that are available today and those that are looking for property to purchase.

Even in the toughest of property markets, there will always be buyers available for most quality properties. The auctioning of a property is a very focused method of sale; it is implemented over a period of 6 to 8 weeks. During that time the appointed salesperson, the agency, and the client all have a vested interest to implement the strategy required to create buyer interest.

If the client is serious about taking their quality property to the market, then an auction process is worthwhile considering. The property may sell on the day or it may sell soon thereafter. Importantly the salesperson in the auction process has done the necessary work to flush out a few potential buyers that will be lodging offers as appropriate.

series of charts in commercial real estate presentations
Commercial Property Presentation Strategies

 

 

Realistic Auction Clients

The client or owner of the property that is to be auctioned has to be realistic regards expected current market prices; that conditioning or information process is really the job of the salesperson to provide and implement. The client needs to be fully informed regards the factors of the local property market as they apply to the property type and the method of sale.

 

Unconditional Contract of Sale

Another clear advantage of the auction process is that the resultant contract is normally unconditional and will proceed to a precise and timely settlement. The factors and delays of due diligence and subject to clauses that you see in normal contracts do not normally apply in auctions between the time of sale and settlement. That being said, the client must ensure that all relevant facts and property details are accurate and correct prior to the auction marketing and inspection process. The bidders on the auction day need to be fully informed about the property prior to the placing of their bids.

 

Auction Success Rates

The auction success rates will vary from time to time in your local area based on the amount of enquiry and the number of people that attend the property auction on the day. That being said, every property that is taken to auction has to be taken through a serious amount of marketing and deliberate attention to detail so that the correct amount of enquiry can be generated. Here are some clear strategies and tips that can apply to the auction of listing and marketing process.

  1. The auction method of sale is a timed strategy designed to flush out the buyers in the market. Genuine buyers always exist for a quality property; you just need to find them.
  2. The momentum of an auction should be timed across a period of 6 to 8 weeks. Most of the marketing campaign should be expended in the first half of that time period.
  3. Create a quality information memorandum relative to the property prior to the commencement marketing. When people make enquiries, and they are suitably qualified, you need to be sending out the information memorandum quickly and efficiently.
  4. Depending on the property, there may be a need for confidentiality relating to the information memorandum that you are to issue. This is normally the case when you’re dealing with larger properties with extensive tenancy details and matters relating to financial performance. On that basis, you may need a confidentiality agreement to be signed prior to providing the information memorandum and inspecting the property with qualified prospects.
  5. Design a comprehensive marketing campaign that is targeted to a specific target audience and regional location. Most purchasers of commercial property today come from the same general region and the key asset under promotion.  Get to know all of the local people in your property market that could be active.
  6. Check out the prices for similar properties in the region over the last two years. Identify any competing properties that will be on the market at the same time as your subject property.
  7. Get all the necessary reports and documentation together that support the function of the property, the improvements, the tenancy mix, and the property ownership. All of this should be done prior to any marketing commencing. Remove any hurdles or problems as part of this preparation process.

In any commercial or retail property market and at any time, the auction process is worthwhile considering as an alternative method of marketing. If that is to be the choice applicable to the subject property then the property owner, the agency, and the salesperson need to establish a firm mutual strategy of auction marketing, inspection, and promotion to get the correct message of the property out to the targeted audience. If the client wants a timely result in selling their property then the auction process is worth considering.

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Market Knowledge Tips for Commercial Real Estate Agents

city buildings on harbour

In commercial and retail property sales, as a commercial realtor or agent, it is essential for you to understand the trends of the local market and sustain the right type of market knowledge.  This information will help you greatly when it comes to the listing and presentation stages of interacting with the client.

Most clients would like to think that they know a lot about the property market, and most particularly their property, however, the truth of the matter is that they are sadly lacking when it comes to true market awareness.

real estate prospecting
Commercial real estate prospecting system for agents and brokers

 

 

Be Market Fact Informative

On that basis, we should take the client through an informative presentation that helps them understand just what is going on in the property market today.  Here are some guidelines for that.

  1. Existing listings on the market now in the local area will have an impact on the particular property being listed.  Look for those other listings in the local zone or precinct that are comparable to your listing and priced to sell quickly.  The question will be just how long those properties have been on the market and why they may not have sold yet.  Those questions will give you some trending factors for your listing.
  2. Prices being asked will vary from property to property.  In some cases, the type of enquiry in the market today will have limits on the amount of money that can be spent.  As the price of a property goes up or is in the higher price range, the levels of qualified and valid enquiry fall away.
  3. Prices achieved in an actual sale should be tracked.  It is sometimes hard to get the sale results from a particular property however over a few months the word will get out and you will know the difference between the original asking price and achieved sale price.
  4. Time on the market will extend when the market is slow or the property is unusual.  Look for those factors at the time of listing.  The client will need to be briefed and primed for the slow sales cycle.  That being said, there are always ways to shorten the time on the market.
  5. Where the enquiry for the property comes from during the year will vary.  Sometimes the enquiry will be local, whilst at other times you can look at a broader market for the potential property buyers.  These facts will impact your marketing recommendations and decisions.
  6. What are the people or buyers looking for when it comes to particular properties today?  Older properties may be challenged by technology and the services and amenities that are available in the listing.
  7. What is the target market for the property?  On that basis, the question should be asked as to how the property should be featured in any marketing activities.  You are the expert so your opinion and expertise can solve that question.
  8. Tell the client of the best method of sale to suit the market and the property today.  The client wants results and the best method of sale will have an impact on the type and volume of enquiry that you get.

All of these factors will help you in showing the client the best way forward.  When you list a property for sale, the client’s decision to list should not be based on the discounts that any agent offers; but rather the combination of strategies that evolve from all of the above.  That is the making of a top agent today.