Majority landlords choose to sell their commercial property for sale through private treaty, which often involves using a commercial agent to help, but can be done privately. Another less common method involves commercial property auctions. At Blue Alpine, we can assist with the disposal of your commercial property via Private Treaty or auction.
Selling Commercial Property via Private Treaty
The most common way to sell a commercial real estate property is by private treaty on the open market in which the property will be advertised with an asking price and the buyer will submit an offer for you to consider.
In England and Wales, once an offer has been accepted and an agreement is reached, the seller’s agent will create a document called heads of terms (HoTs). The HoTs outlines the main points of the transaction such as the type of agreement struck, how the deal will be financed and proposed timescales. The heads of terms (HoT) will be sent to your solicitor (the seller’s solicitor) to the buyer’s solicitor and this is usually done by your commercial real estate agent.
The next step is for a contract of sale will be issued by your solicitor, and those contracts signed and exchanged. The exchange of contracts will only happen once the buyer has completed their research, searches, arranged any commercial real estate loans necessary and asked all the questions they need with the help of a solicitor.
Both you as the seller and the buyer are only legally committed to the sale once the contracts are exchanged, up until this time if circumstances change, either the seller or the buyer can abort the transaction. If the seller is receiving multiple offers from multiple buyers, a ‘sealed bids’ situation may be proposed by the commercial real estate agent. This involves each prospective buyer submitting their best and final offer. Once the deadline passes, the commercial agent and you (the seller) will review the best offers and decide how to proceed. You are likely to accept the offer you believe to be the best, but you are under no obligation to do so.
Selling via Commercial Property Auction
Selling a commercial property can be a drawn-out process, so using an auction method to sell your property may be more appealing. There are regional and national auctioneers, for example: Allsop Auction, Acuitus Auction, Barnett Ross Auction, Strettons Auction, Clive Emson Auction, Bidx1 Auction and several others.
Selling a commercial real estate property at auction may be suitable if some or any of these apply:
Selling a commercial real estate property at auction may be suitable if you need to sell quickly and/or there are problems with the property that would put off a normal buyer such as:
- Structural issues with the building or the ground it is built on
- The commercial property is in poor condition
- Legal technicalities present an issue
- The property cannot be mortgaged for any reason
- The commercial property is tenanted
- Difficulties gaining access to the property
Commercial property auctions are typically viewed as an opportunity to buy or sell quickly, often below the market value. Please note, the latter is not always the case. Purchase prices can often far exceed expectations if the bidders become emotional in the auction room and a bidding war begins due to multiple bidders being interested.
Auctioneers will normally set a guide price for the commercial property giving an indication of the possible price the property may achieve. Guide prices can be lower than the market value in order to create interest among potential buyers.
You can also set a reserve price, which is generally confidential between you and the auctioneer, and is the minimum price you allow the property to sell for at the auction.
On the day of the auction, once the hammer falls, the buyer with the highest bid is committed to the purchase your commercial property. Important to note, that the contract is exchanged on the fall of the hammer, so from this point you cannot pull out. The deposit is typically 10% of the winning bid amount and is payable by the buyer at the same time.
The buyer will also pay other fees in addition to the purchase price, such as the auctioneer fees and any other fees you specified in the special conditions part of the auction legal pack.
After the auction, the buyer typically has 4 to 6 weeks to pay the remaining 90% balance and complete the transaction. If the buyer is not in a position to complete the transaction, then he/she will lose their deposit and you will be able to retain to the deposit monies that were paid. The auctioneer would then contact the under bidder to offer the property to them to purchase.
Preparing Your Commercial Property for Sale
Key information needed for selling your commercial real estate property include:
- Current tenancy schedule
- Occupancy rate over the entire life of the property’s ownership
- Copy of tenant(s) statements
- Copy of lease(s)
- Copy of rent review memos
Marketing the Commercial Property
The starting point of selling commercial real estate is the marketing process. Normally your commercial property consultant will create particulars with key information about the property, which includes the asking price, features, property description, location description, tenancy and accommodation schedule and any other relevant information.
At Blue Alpine, we create the particulars and you would approve this marketing document before it is sent to our investor database and added to our website and other online portals. We then keep you updated on a weekly basis with feedback from prospective buyers or in real time, as and when offers are made.
Get in contact if you are considering selling your commercial property
Our expert commercial property disposal team can guide you through the process of selling your property, from start to finish. Whether you are a landlord or occupier, we will use our in-depth market knowledge to ensure you achieve the best possible price.
Depending on your requirements, we can actively promote the sale of your property via Blue Alpine’s website, LinkedIn, 3rd party platforms coupled with our tailored made mailouts or alternatively, approach the disposal of your property in a more discreet manner. If you are a discriminating seller, we can approach a targeted audience of investors employing one-on-one meetings, telephone and/or emails.
Our database is comprised of a diverse set of prospective investors categorised according to location, investment type, budget and tenant preference. Whether Blue Alpine is actively or discreetly marketing your property, our qualified investor database increases the likelihood of obtaining you the most advantageous price.
Disclaimer: The information Blue Alpine supplies is for educational purposes only, to provide investors with an overview of information regarding investing in UK commercial and residential property. This information is not to be treated as advice; it is to be used as a reference point to further conduct your own research. Assumptions made in the commentary and analysis are not reflective of the position of any entity other than Blue Alpine’s – and, since we are critically-thinking human beings, these views are always subject to change, revision, and rethinking at any time. Please do not hold us to them in perpetuity. The authors and Blue Alpine are not to be held responsible for misuse, reuse, recycled and cited and/or uncited copies of content within this article by others.