Commercial Real Estate Auction – A Win - Win - Win Situation For All 3 Parties Involved
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Commercial Real Estate Auction – A Win  -  win  -  win Situation for All 3 Parties Involved

While many of us have preconceived notions about real estate auction, the truth is that it can be used to sell non-distressed properties as much as it is used to sell distressed assets. Commercial real estate auctions provide fantastic benefits to all 3 parties involved, without any of the caveats that traditional methods of selling real estate have. Let’s see how each party benefits in an auction.

Seller

There is no better feeling for a seller than knowing that their property will sell at true market value. So there is no reason to keep slashing or reducing the price of your real estate until someone offers to buy it. In commercial real estate auctions, the market drives the price up and closing usually occurs at the highest possible market value of the property.

What’s worse than sitting on real estate for an undetermined time period is having to incur extra costs while holding on to it. Since commercial real estate auctions allow the asset to be sold quickly, owners don’t have to worry about long-term holding costs such as maintenance and taxes.

Buyer

A wise purchase decision involves spending the optimal amount of money when purchasing an asset. A real estate auction facilitates exactly that. Through competitive bidding, buyers are able to purchase property at true market value, versus trying to reach a price that a broker has set. With an auction, buyers can bid on an asset and once the reserve has been met, the highest bidder goes home as the owner of the property.

Nothing can be more discouraging to a buyer than a non-serious or non-committed seller. Often, sellers may put their asset up on the market just to gauge the kind of response they get. So in many cases they’re not committed to sell. In an auction however, the seller is putting their property up for sale for onlyone reason, to sell it.

Broker

While many brokers are hesitant about pursuing commercial real estate auctions to sell property, they have nothing to lose in the process. Brokers get to generate and utilize a list of qualified buyers who are ready to make a purchase decision. Secondly, they can offer clients new methods of selling and purchasing real estate. Statistically, auctions end up generating more revenue for brokers and increase their market share.

Just because a broker is advertising the auction of one property, doesn’t mean that a buyer will only be interested in that specific asset. They may evaluate the whole portfolio a broker has and chances are, they’ll end up liking at least one or a few of the properties. The concept of an auction naturally drives buyers towards the assets.


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