Auctions providing a shining light of clarity in uncertain times
An interesting trend has emerged post-COVID – auctions seem to be growing in popularity.
An interesting trend has emerged this year for commercial property opportunities. Auctions appear to be growing in popularity.
Mark Sumich, multiple winner of New Zealand’s auctioneering championship says there is no question that auction activity has picked up since the uncertainty surrounding the pandemic.
“There are a number of reasons for that. The main one is that buyers are seeking clarity. There's some finality about it, so if they get organised then a seller is going to listen to the market and pass on sell their property on the day,” says Sumich.
“Buyers are recognising that. I’ve had fantastic success with JLL running auctions, which is a reflection of the market coupled with experienced agents that know how to run an auction campaign. In the auctions I've done with JLL in the last couple of months there has been significant competition with a 100% success rate.”
And of course, it’s a similar story for sellers.
“The unconditional nature of it is paramount. We are finding sellers are prepared to be very reasonable about things when they're dealing with cash as if they want genuine solutions to their property quandary then it's sitting right there in front of them,” says Sumich.
JLL Agent Jaye Miller says it’s all about due diligence.
“We're giving people time to do their consideration beforehand, we're providing them with all the information, but if they want to buy it then they have to get prepared to offer cash,” says Miller.
“As we’ve seen with the properties we’ve taken to auction over the last few months, people get access to cash when they know that sellers are making genuine decisions. These properties have all sold at 5% below CAP with several bidders attending every event.”
Of course, the commitment to an auction on both sides of the coin can be daunting but Sumich has some advice.
“Sellers should put significant emphasis on that tight window of 3-4 weeks and invest more into marketing. Spend the money up front as those that do will be rewarded at the backend - it may only mean one more bid at auction but often that will more than cover the extra investment,” says Sumich.
“Also, make sure you’re working with the right agency. Anyone can fluke one result but if someone has a history of doing it over a reasonable period of time using the auction method then they should be dismissed at your own peril.”
When it comes to buyers, JLL Agent Euan Stratton says there is no reason to feel intimidated at an auction.
“Take confidence in the fact that firstly you can see your competition and secondly that you're dealing with similarly inclined buyers on a level playing field,” says Stratton.
“Make sure that prior to the auction you know the property inside out, as well as the surrounding area and any other moving parts that might be in the works. We've had auctions on-site, in the JLL office, and have more scheduled to go live with both environments proving to create great hyped-up environments.”
With economic uncertainty still a constant, JLL doesn’t expect auctions to be slowing down anytime soon.
JLL (NYSE: JLL) is a leading professional services firm that specializes in real estate and investment management. JLL shapes the future of real estate for a better world by using the most advanced technology to create rewarding opportunities, amazing spaces and sustainable real estate solutions for our clients, our people and our communities. JLL is a Fortune 500 company with annual revenue of $18.0 billion in 2019, operations in over 80 countries and a global workforce of nearly 93,000 as of June 30, 2020. JLL is the brand name, and a registered trademark, of Jones Lang LaSalle Incorporated. For further information, visit jll.com.