Buying and selling commercial property by auction

Why (or when) someone would need this service?

For buying and selling freehold commercial property by auction. The seller may have different reasons for making a sale through auction, particularly if it is imperative that a sale is achieved by a particular date or if the property suffers from a problem which has proved a stumbling block in prior attempted private sales. A buyer may be looking for a bargain or have been unable to negotiate a price privately.

How does the process work/what are the steps?

A seller client contacts us in advance of the auction and provides the auction details to us. We will then provide an “auction pack” including all relevant documents which will be required by a buyer’s solicitor. These are typically made available online by the auctioneer prior to the auction.

A buyer client would typically contact us once they have identified a property in an auction catalogue which may be suitable to them. Occasionally a buyer may have already purchased the property at auction before they first instruct us although this is not advisable. In such cases we can still act but the buyer will probably have to go through with the purchase, whatever our advice.

The contract is made when the successful bidder’s bid is accepted by the auctioneer as the final bid made above the set reserve price.

Following a successful sale or purchase at auction we deal with the other party’s solicitors to complete the sale or purchase of the property within the contractual time period.

How long does it take?

When acting for a seller we would ideally like about six weeks’ notice prior to the auction to allow us time to obtain relevant searches and have these ready sufficiently in advance of the auction date.

When acting for a buyer we would ideally like two weeks from first instruction prior to the auction date so we may properly advise on all information available.

Completion typically takes place four or six weeks after the auction.

Is it expensive ? How do the costs work?

For auction work we typically agree one fee for (in the case of a seller) preparing the auction pack and sending copies to interested parties and (on behalf of the buyer) reviewing the auction pack prepared by the seller’s solicitors. We would then charge a second fee, based upon the value of the transaction on a sliding scale, to see the matter through to completion. If the seller is confident of achieving a sale we may agree special arrangements where most of our charges are recovered from the buyer under the terms of the contract.

What are the things people should consider before calling?

Buyers should have details of the auction catalogue lot number and confirmation of their proposed funder, if they wish to have mortgagee consent to the transaction prior to bidding at auction.

Sellers should contact us as far in advance as possible, provide all deeds and documents in their possession and give full details of the name of the auctioneer, the date of the auction and (if issued) the lot number.

Why are Grant Saw the best people for the job?

You will have a named solicitor acting for you who will take a pro-active approach to progressing the matter to completion. We regularly have a stand at the Andrews Scott Robertson auctions in Central London and are the only law firm to do so.

Buying and selling commercial property by auction tips

For sellers:

  • make sure that any problems with the property are fully disclosed in the auction pack and if necessary discuss with the auction house
  • agreeing a six week (rather than a four week) completion can be beneficial buyers

For buyers:

  • always get legal advice on the auction pack in advance. If you have never been to an auction before, go and watch one carefully before you bid for the first time

Buying and selling commercial property by auction myth busting

What myths are there are around this area?

That if the buyer’s mortgage company will not agree to lend the buyer money for a property purchased at auction the buyer can cancel the contract. This is very seldom the case.