Introduction
In some circumstances, it may be possible to purchase a commercial property before the auction takes place by submitting an offer directly to the seller. This is commonly referred to as a pre-auction offer.
This guide explains how pre-auction offers work and what buyers should consider before proceeding.
Making an offer prior to a commercial property auction
Although properties are marketed for auction, sellers are sometimes willing to accept an offer before the auction date.
This typically occurs where:
- The seller wants certainty of sale
- There is strong early interest in the property
- The seller wishes to avoid auction risk
- A buyer submits an attractive offer
Prospective buyers can usually make an offer at any point before the auction by contacting the auctioneer or selling agent.
The auctioneer will confirm whether the seller is prepared to consider offers and may request evidence of funding before presenting the offer to the vendor.
Advantages of buying before auction
Making a successful offer prior to auction can offer several advantages.
These may include:
- Avoiding competitive bidding on auction day
- Securing the property at a known price
- Reducing uncertainty and risk
- Saving time and costs associated with attending auction
- Avoiding emotional bidding pressure
For buyers with clear investment criteria, pre-auction negotiation can provide greater control over the purchase process.
Understanding seller expectations
If a seller agrees to consider a pre-auction offer, they will usually expect:
- A strong and credible offer price
- Evidence of funds or finance arrangements
- Ability to exchange contracts quickly
- Commitment to proceed without delay
In many cases, sellers will require exchange of contracts within a short timeframe, sometimes within 48 hours to 7 days.
Best and final offers
Where multiple buyers express interest before auction, the auctioneer may invite best and final offers.
This is a competitive process where:
- Buyers submit their highest offer confidentially
- The seller chooses the preferred bidder
- The successful buyer proceeds to exchange contracts
This process can resemble a private treaty sale but with accelerated timescales.
Financial preparation before making an offer
If your pre-auction offer is accepted, you must be ready to proceed immediately.
This normally involves:
- Paying a deposit (typically 10%)
- Signing contracts
- Committing to completion within the agreed timeframe
Therefore, finance should be arranged before submitting an offer.
Failure to complete after exchange can result in financial penalties and loss of deposit.
Professional advice and due diligence
As with any auction purchase, you should carry out full due diligence before making an offer.
This includes:
- Reviewing the legal pack
- Inspecting the property
- Taking surveyor advice where appropriate
- Confirming finance arrangements
- Understanding VAT and SDLT implications
If you are unfamiliar with auction transactions, advice from a commercial property agent or adviser can be valuable.
Risks of pre-auction offers
There are also considerations to keep in mind.
For example:
- You may offer more than the property would have achieved at auction
- The seller may still proceed to auction if offers are not strong enough
- Exchange deadlines may be tight
- Competitive interest may still emerge
Buyers should remain disciplined and base offers on clear financial analysis rather than urgency.
Summary
Making an offer before a commercial property auction can provide certainty and reduce competition, but buyers must be fully prepared to proceed quickly if accepted.
Strong preparation, funding readiness, and professional advice are essential when pursuing a pre-auction purchase.
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