Selling commercial real estate can be complicated and slow. Traditional sales often take months or even years, filled with long negotiations, uncertain buyer interest, and unclear final prices. This slow process can delay your cash flow, increase holding costs, and cause you to miss valuable opportunities as market conditions change.
This uncertainty and delay can be frustrating for sellers who need quick, reliable results. Waiting too long to sell can cost you money and create unnecessary stress.
Fortunately, selling your commercial property at auction offers a faster, more transparent alternative. If you’re looking to sell commercial real estate in Texas, auctions provide a powerful way to attract serious buyers and close deals quickly.
According to the National Auctioneers Association, auctions often lead to faster sales and fair market values compared to traditional listings. In this guide, you’ll learn how commercial real estate auctions work and how to sell your property successfully using this efficient method.
What Is a Commercial Real Estate Auction?
A commercial real estate auction is a public event where buyers compete by bidding to purchase commercial properties.
Unlike traditional sales, which can drag on with private negotiations, auctions set a specific time and place (either physical or online) for the sale.
This creates a transparent and competitive environment, often resulting in faster sales and potentially higher final prices due to bidding competition.
Types of Commercial Properties Sold at Auction
Commercial auctions cover a wide range of property types, including:
- Office Buildings: From small professional suites to large corporate towers.
- Retail Centers and Malls: Shopping plazas, standalone stores, and retail complexes.
- Industrial Warehouses: Storage facilities, manufacturing plants, and distribution centers.
- Multifamily Apartment Complexes: Buildings with multiple residential units for rental income.
- Land and Development Sites: Vacant lots or parcels ready for construction or development.
Almost any type of commercial property, from specialized facilities to large-scale developments, can be successfully sold at auction, making it a versatile option for sellers.
How Commercial Auctions Work (In-Person, Online, and Hybrid)
Commercial real estate auctions can take different forms depending on how bids are placed. Understanding these formats helps sellers choose the best method to attract serious buyers and get the best price.
- In-Person Auctions: Buyers gather at a physical location, such as an auction house or property site, where an auctioneer leads the bidding live. This traditional setting allows real-time competition and immediate interaction, creating excitement and urgency that can drive up prices.
- Online Auctions: Bidding takes place entirely on an internet platform. Buyers can participate from anywhere, expanding the pool of potential bidders. Online auctions are convenient, fast, and allow for extended bidding periods, making them ideal for reaching remote or international buyers.
- Hybrid Auctions: This format combines in-person and online bidding. While some buyers attend the auction physically, others bid remotely through an online portal. Hybrid auctions maximize buyer participation and competition by blending the benefits of both worlds, resulting in wider reach and potentially higher sale prices.
Types of Commercial Real Estate Auctions
Different auction types serve different seller needs and control over the sale outcome.
- Absolute Auction: The property sells to the highest bidder regardless of price. There is no minimum or reserve price. This creates urgency and often attracts more bidders.
- Reserve Auction: The seller sets a minimum reserve price. If bidding does not reach that price, the property may not sell. This protects sellers from selling below market value.
- Minimum Bid Auction: The auctioneer sets a minimum opening bid, but the seller may have the right to accept or reject the final bid after the auction.
- Online Auction: Entirely digital auctions where buyers bid remotely. These can be either absolute or reserve auctions and offer broader exposure.
Highlight: Explaining auction types clearly helps sellers choose the right auction strategy and understand how it affects sale outcomes.
Step-by-Step Guide | How to Sell Commercial Real Estate at Auction
Choosing a specific type of commercial property auction will highly impact the bidding process and final sale. To sell commercial real estate at auction online, you’ll need to:
- Find an auctioneer
- Submit the property for evaluation
- Create a customized auction plan
- Promote the real estate to serious buyers
- Live auction and competitive bidding
- Closing the deal and transferring ownership
1- Find an auctioneer
Always choose the auctioneer based on the type of auction that fits your needs most. We recommend you conduct thorough research to find an auctioneer who specializes in commercial real estate and who also has a trustworthy reputation.
For example, we at the Auction Section always ensure your property sells at a fair price and are ready to go above and beyond to meet your needs and help you out through the process.
2- Submit the property for evaluation
After you’ve chosen your designated auctioneer, the next step is to submit your property for evaluation. During this phase, your real estate will be thoroughly reviewed to determine its condition, features, and appeal to buyers.
Once the auctioneer has all the necessary information regarding the property’s size, amenities, and location, they’ll conduct a thorough market analysis to determine a fair price for your real estate.
Remember that establishing realistic expectations is highly based on the selling price of similar properties and their demand.
3- Create a customized auction plan
One of the most complex parts of the commercial real estate auction process is creating a customized auction plan.
Before the property is listed for auction, it must have a detailed legal pack that includes all the necessary legal documents for the new owners. This includes any title deeds and leases that must be reviewed by the auctioneer to ensure the information listed is correct.
Besides the legal pack, the auctioneer will also create a professional listing highlighting your real estate’s unique features. These listings should always include high-quality photos of the property as well as a detailed description so the buyers know what they’re bidding for.
Furthermore, creating a customized auction plan involves determining a final pricing strategy, including a potential reserve price and starting bids. Doing so allows you to have full control over the sale price and avoid selling the property at a lower FMV (fair market value).
4- Promote the real estate to serious buyers
Once you have a customized auction plan, the next step is to promote the real estate to serious buyers. This involves creating a detailed marketing strategy used to attract the right demographics to improve your chances of a sale.
Depending on the type of property and marketing strategy, the professional listing will be promoted through various channels, whether online or through traditional media.
These efforts aim to increase the overall exposure of your real estate and maximize the overall bidding interest.
5- Live auction and competitive bidding
The main stage of the process is the live auction and competitive bidding. Once the auction event starts, those interested in buying your property will have the chance to compete in the auction through real-time bidding.
Due to the transparency of the process, the auction creates a competitive and dynamic environment that improves your chances of selling the real estate.
The auction ends once the highest bidder is the only bidder left. If you have previously set a reserve price, the highest bid must have passed the threshold for the property to be sold.
As soon as the event ends, the winner must pay a 10% deposit from the final price to continue with finalizing the sale.
6- Closing the deal and transferring ownership
The last step in selling your real estate through auction is closing the deal and transferring ownership. Since auctions are known to accelerate the sales process, most final transactions are completed within 30 to 45 days post-auction.
During this timeframe, you’re supposed to coordinate with the buyer and sign all the needed paperwork to transfer the ownership.
Common Mistakes to Avoid When Selling Commercial Real Estate at Auction
Avoid these pitfalls to ensure a smooth and successful auction sale.
- Poor Preparation and Documentation: Lack of proper paperwork or property issues can scare off buyers.
- Overpricing or Setting Unrealistic Reserve Price: Setting prices too high can deter bidders and cause your property not to sell.
- Inadequate Marketing: Not reaching enough potential buyers reduces competition and final sale price.
- Ignoring Legal and Financial Advice: Failing to get professional guidance can cause costly delays or disputes.
Benefits and Risks of Selling Commercial Property at Auction
Understand the advantages and potential challenges before deciding to sell at auction.
Benefits
- Speed: Auctions have a fixed timeline, speeding up sales.
- Transparency: Open bidding shows a fair market price.
- Competition: Bidding wars can increase your sale price.
Risks
- Price Uncertainty: The Final price depends on the buyer’s interest and can be lower than expected.
- Limited Negotiations: No prolonged bargaining; terms are set in advance.
- Marketing Costs: Effective marketing is critical and may require upfront investment.
Tips for Sellers: Maximize Your Auction Success
Use these expert tips to get the best possible outcome from your commercial property auction.
- Choose Experienced Auctioneers: An expert auctioneer brings buyers, runs smooth auctions, and advises on terms.
- Provide Clear Property Information: Transparency builds buyer confidence and encourages stronger bids.
- Set Realistic Expectations: Understand market conditions and set achievable reserve prices.
- Promote Widely to Attract Buyers: Broaden your reach through online listings, email campaigns, and broker networks.
Frequently Asked Questions
Yes, setting a reserve price ensures your property will not sell for less than your minimum acceptable amount, giving you financial protection during the auction.
The entire auction process typically takes between 4 to 8 weeks, starting from the listing date up to the auction day. However, timing can vary based on property type and market conditions.
Sellers are generally responsible for auctioneer fees, marketing and advertising expenses, and legal or administrative costs related to the sale.
Withdrawing your property depends on the auction terms and contract. Usually, it’s possible to withdraw before the bidding begins, but after that, withdrawal may not be allowed.
Online auctions take place on digital platforms where buyers submit bids remotely during a scheduled auction period, allowing wider participation and convenience.
Ready to sell your commercial property quickly?
Selling commercial real estate at auction is a highly effective way to achieve a fast, transparent, and competitive sale. Unlike traditional methods, auctions eliminate prolonged negotiations and uncertainty, delivering clear results in a set timeframe.
However, the key to success lies in thorough preparation, setting realistic expectations, and employing targeted marketing strategies to attract serious buyers.
To maximize your chances of a successful auction, consult with experienced auctioneers and real estate professionals who can guide you in selecting the right auction type and preparing your property to stand out.
Ready to sell your commercial property quickly? Explore your auction options today or contact our expert team to get started on your path to a successful sale.
