Can Using an Auction House be Beneficial for Start-ups?

by Nibletz Staff in Funding
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Auction houses hold many benefits for individuals and big businesses seeking to buy and sell property through this method. The main one of these for those looking to buy is the opportunity to get an absolute bargain, while for sellers it can be a quick way to sell a property. For start-ups, going to an auction house such as through Allsop can be beneficial in many ways, though for certain companies there may be one or two drawbacks as well.

Advantages – Great Value Options

Undoubtedly the main reason many will turn to an auction house is to find a bargain. This can help start-ups looking for affordable property, rather than being lumped with expensive rental or ownership costs. There is also no fixed asking price, which means buyers can secure a property for a lower amount than you would usually have to pay. Plus, once you have made the highest bid there is no chance for it to be remarketed or the seller to accept other offers.

Investment Opportunities

Buying a property at auction doesn’t mean it has to remain your business’ headquarters forever. It could be a temporary base bought for a low price as a business hold up and then sold later on for a profit. This provides your start-up not only with a place to work from but also a good investment. Compared to many other investments, the property market is one which has retained and grown in value, so can be seen as a more stable investment than the likes of shares, currency and others.

Speed

It can be a lengthy process finding, buying or renting office space or a building to use for your business. There are few quicker ways to do this than through an auction, whereby you can be completing on your purchase within 28 days of the hammer falling. The same is true for any businesses hoping to sell property, as the buyer is committed so that the sale becomes as immediate as possible.

Disadvantages

Risk Factor

There is always going to be some element of risk involved with using an auction house to purchase property. You can easily go to one, two, three or more and not find anything that meets your needs. Sometimes it may seem like there is a bargain available but the property could either have hidden issues (such as large repair costs), be in an undesirable location or other factors. Still, it can be worth the risk if you unearth a real bargain.

Obligations

It’s great that the process is so fast, but it does mean that you can rush into things. Once the hammer falls you have an obligation to buy the property. With plenty of research (an auction house should provide all the relevant documents before the auction) then you shouldn’t end up surprised by your purchase. However, elements such as a low price and the competitive environment can encourage some to bid, win and take on the obligations for properties they otherwise do not need.

An auction house can be a great place for start-ups to find a bargain on any property for their usage or as an investment, but it is important to remain careful and aware of any risks.

By Nibletz Staff

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