There are lots of myths surrounding industrial asset recovery and industrial equipment auctions. Some of them are true, some of them are false.
Industrial assets include equipment, vehicles, buildings, machinery, and other large items. They are often left behind after a company shuts down or moves out of town. These assets can be worth millions of dollars. Let’s take a look at five common misconceptions about industrial asset recovery.
1. The Item Must Have a Higher Value to Justify Its Sale
If your property is not generating income or does not meet current market standards for its intended use, there is no way it will sell for what was reasonably valued. Very few sellers expect to get back 100% of their original investment in most cases—even if they were paid fair market value when purchased. Instead, they assume that their asset has lost much of its value and that any proceeds from the sale would merely cover costs and expenses.
2. I Don’t Know How to Start Trying to Sell It
With the right plan, marketing strategy, and follow-up techniques, selling an older asset can be more accessible than ever before. You should always begin with a good inventory of potential customers in mind, as well as a complete list of everything available for sale on your sites.
Once you have these two things covered, you want to ensure that each piece of information gets posted on multiple sites so that your message reaches more people. This also provides you with additional opportunities to build relationships with potential buyers.
3. It Costs Too Much Money to Clean Up or Repair the Property
The truth is that cleaning up old industrial properties is rarely done for free. Costs vary depending on several factors, including the type of asset involved, size of the space, condition of the building, location, etc. You may also be required to pay fees for permits, demolition, excavation work, asbestos removal, structural repairs, environmental assessments, etc. Sometimes, getting rid of the dilapidated asset requires expensive demolition work. These costs have to be subtracted from the net sale price, which could increase the final cost significantly.
However, the actual amount of money needed to renovate an asset varies tremendously based on several factors such as the age and quality of the structure, the condition of components such as mechanical systems, flooring, roofing, etc., whether the asset needs significant renovations or just minor maintenance, and many others.
4. I Need to Make A Profit to Recover My Investment
This one comes up quite frequently among sellers who are asking for offers. Often the seller wants to recover their initial investment through the industrial equipment auctions. This can become nearly impossible when we factor in real estate commissions, advertising costs, office overhead, legal fees, etc. However, there are some exceptions. One finds new uses for industrial space that add value over and above renting space. For example, a manufacturing facility might offer added benefits like product customization, unique branding, specialized capabilities, etc. Another exception is buying distressed industrial properties to rent them out until conditions improve. After all, if you only buy and hold something, you don’t earn anything extra to cover the fixed operating costs.
So, remember that not every industrial asset is destined to sell at once but instead will probably evolve into a rental or eventually into a separate business. And when someone decides to purchase your assets, you’ll be ready to act quickly and efficiently to close the deal.