Should You Sell Your Commercial Property Through an Auction?
In today’s commercial real estate market, both sellers and buyers are exploring innovative ways to transact properties efficiently. One method gaining traction is the commercial real estate auction. Whether you’re seeking a swift sale, a competitive bidding environment, or an alternative to traditional brokerage, auctions present a unique opportunity.
This article covers:
✅ What commercial real estate auctions are
✅ Who benefits the most from them
✅ The pros and cons compared to traditional sales
What Is a Commercial Real Estate Auction?
A commercial real estate auction is a structured bidding process where properties are sold to the highest bidder. Unlike traditional sales that rely on direct negotiations, auctions create a competitive environment that can often drive up the final sale price.
There are different auction formats, including:
🔹 Live in-person auctions
🔹 Online auctions
🔹 Sealed bid auctions
🔹 Hybrid (simulcast) auctions
Top platforms facilitating commercial real estate auctions include Ten-X (owned by CoStar Group, the publisher of LoopNet) and Crexi, both offering extensive marketing, due diligence tools, and streamlined closing processes.
Who Are Commercial Real Estate Auctions Best For?
While auctions were historically associated with distressed properties, they are now widely used for all types of commercial assets, including multifamily buildings, office spaces, retail centers, and hotels.
Sellers who benefit most from auctions include:
✔️ Those looking for speed and certainty – Auctions typically close within 30-100 days, compared to months with traditional sales.
✔️ Owners of unique or hard-to-value properties – Competitive bidding can establish true market value for properties without clear comparables.
✔️ Investors interested in value-add opportunities – Properties needing repositioning, leasing, or renovations often perform well in auctions.
Buyers benefit from:
✔️ Transparency – The bidding process provides real-time competition and clear pricing.
✔️ Access to diverse opportunities – Auctions feature everything from fully leased properties to redevelopment opportunities.
How Does the Auction Process Work?
A typical auction involves three key phases:
1. Pre-Auction Preparation
🔹 Sellers work with platforms and brokers to set a reserve price (minimum acceptable sale price).
🔹 Due diligence materials (title reports, environmental reports, etc.) are prepared for potential buyers.
🔹 A comprehensive marketing campaign is launched to attract qualified bidders.
2. The Auction Event
🔹 Buyers register and may need to provide proof of funds or an initial deposit.
🔹 The auction occurs over a set period.
🔹 Bidders compete, and the highest bid determines the final sale price.
3. Post-Auction & Closing
🔹 The winning bidder signs a purchase and sale agreement (usually within 24-48 hours).
🔹 An earnest money deposit (typically 10% of the purchase price) is required.
🔹 Closing occurs quickly, often within 30 days, depending on the platform and transaction structure.
Pros and Cons of Selling via Auction
✅ Pros:
✔️ Faster transactions – Auctions typically close within 30-100 days.
✔️ Competitive bidding – The auction environment can drive up the sale price.
✔️ Certainty of execution – Buyers are pre-qualified, and transactions are non-contingent.
✔️ Transparency – Buyers know exactly where they stand, reducing negotiations.
✔️ Extensive marketing exposure – Platforms like Ten-X and Crexi reach a broad pool of investors.
❌ Cons:
⚠️ Risk of not meeting the reserve price – If bidding doesn’t reach the set price, the auction may be unsuccessful.
⚠️ No post-bid negotiations – Once the highest bid is placed, there’s little room for adjustments.
⚠️ Upfront costs – Sellers may pay auction platform fees, marketing, and due diligence expenses (though buyers often cover these costs).
⚠️ Limited buyer pool – Some buyers prefer traditional sales due to financing contingencies and more flexibility.
Should You Sell Your Commercial Property via Auction?
If you’re looking for a fast, competitive, and transparent sales process, an auction may be the right strategy. However, if flexibility and a broader buyer pool are crucial, a traditional sale might be preferable.
📍 If you’re considering selling a commercial property in Connecticut, Massachusetts, or anywhere in the Northeast, we can help you evaluate your best options. Contact us today to explore whether an auction is the right approach for your property!