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Published on: Investment

Are the Best Prices Achieved at Auction? Not Necessarily!

So the year has now ended for the commercial auction houses and they are reporting record results for their December sales.

The major commercial auctioneers provide a thoroughly professional, efficient and effective service in selling commercial property. Particularly investment properties. But is it always the best way to sell your investment? Will you always get the best result?

Earlier this year a long-standing client decided to sell a couple of their investment properties. They made it clear that they wanted the sale to go to auction but were gracious enough to give us the opportunity to place the properties “off market” to known investors prior to the auction.  We agreed the sale price but they required any deal to exchange before the auction date.

We quickly secured purchasers for each of the properties at, but crucially not above, our recommended sale price. Even though the offers received were in excess of the reserves quoted by the nominated auctioneers, our clients felt that they may be able to do better in the room.

They decided to take the two properties to auction. We advised both bidders but neither were prepared to go to auction.

Unfortunately for the client, the prices secured in the room were exactly the same as the offers we had secured . The only difference was that they had incurred significant additional fees and therefore their net receipt was less.

The point is that the level of information available to investment agent “in the market” is now far greater than it ever has been. That means that a good agent will know what price a particular property let to a particular tenant under certain lease terms will achieve. With the appropriate experience, knowledge and crucially information, your agent should be able to accurately predict a sale price. To a very high degree of accuracy.

So it is not always true to say that auctioneers achieve the best price on the market. True, it is transparent and offers certainty in time sensitive situations. But just because the property is sold in the room does not mean it achieves the best price.

Try us and see!

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