Understanding the Concept of Buying Commercial Property at Auction and Its Advantages and Disadvantages

commercial property auction buyers guide When you're buying a commercial property at auction, a number of advantages and disadvantages should be taken into consideration. In order to fully understand the concept of the whole process, we have outlined all the important benefits and risks involved with property auctions that are worth remembering.

Buying a Commercial Property at Auction and the Advantages Involved

Property auctions have become a popular way to buy commercial property today for a number of reasons. For example, it can be a new and exciting experience for you as the whole process differs significantly from buying a commercial property in the ‘traditional’ way by private treaty. However, it is crucial that you are aware of the advantages and disadvantages involved in the process in order to fully assess whether this is the right option for you.

Advantages of buying a property at auction that you can capitalise on include:

1. Quick transaction time frame – As soon as the hammer falls completion is typically achieved within 28 days, providing you are able to pay the remaining balance. The lengthy process associated with buying a commercial property by private treaty can be avoided.

2. Significant discount – It is often possible to find commercial properties way below their market value at auction. This could be due to a number of reasons. For example, the vendor may have had difficulties selling the commercial property on the open market or hopes to achieve a quick sale. This could be advantageous if you’re hoping to acquire a cost-effective commercial property or a profitable investment property.

3. Unique Opportunities – Auctions often offer properties with unique opportunities that you may not usually find on the open market.

4. High degree of certainty – Buying a commercial property at auction comes with a high degree of certainty in many respects. For instance, as the buyer, you will be the one to determine the property price. Furthermore, the completion date is clearly set, therefore, you know exactly when the commercial property will become yours.

As well as the benefits listed above, there are also risk factors that may be worth remembering, such as:

1. Loss of deposit – The speedy process of the auction property transaction could be a disadvantage if you’re having difficulties financing the purchase. If you fail to arrange your finances in advance and are unable to pay the balance prior to completion, you will lose the deposit you have paid, as well as the commercial property.

2. Potential poor property condition – A lot of the commercial properties offered at auction will require large scale renovation due to their poor condition. This could result in larger amounts of money and time being spent than initially planned. This is usually reflected in the hammer price. As always, prior research is essential. Therefore if it is an office or a shop you are planning to move into quickly, buying a commercial property at auction may not be the right option for you.


Registering with MOVEHUT is easy, simply visit out sign up page.