Commercial Property Online Auctions|Why Buy or Sell on Them?


As a buyer, the reason you participate in an online auction is because you anticipate getting a good deal.  If you are an experienced buyer of commercial real estate you should participate in auctions if you see a property that meets your criteria.  As a first time buyer or inexperienced buyer if you are going to participate you should get help from an experienced broker who has helped people buy through the auction process.

Buying property from an online auction requires that you put up a deposit to bid on a property and verification that you have funds to close the deal if you win the bid.  If you require financing you will need to have that set up beforehand as you will need to close the deal within 30 days.  Financing is not a contingency.  All purchases must be funded in cash at closing.

All properties are sold “As Is, Where Is With All Faults and Limitations” so you need to inspect the property prior to bidding on the property.  You need to do this process with the professionals that can help you to properly assess the property.

Once the online auction is final, you have agreed to purchase the Property, including those sales which are subject to the seller’s confirmation. That is why it is important for you to conduct all of your due diligence prior to the auction and prior to bidding on the Property. Winning bidders may be subject to liquidated damages if they fail to complete the transaction in addition to losing their bidding deposit.  Make sure your carefully review the Auction Terms and Conditions

In addition to the standard and customary costs related to the closing of the transaction such as escrow/closing fees, title updates and reports, the winning bidder will pay a Buyer’s Premium on the transaction’s closing date in an amount equal to five percent (5%) of the Winning Bid Amount   (the Buyer’s Premium is added to the Winning Bid Amount to determine the Total Purchase Price paid by the Buyer).

A successful bidder will be required to deposit additional funds with the escrow/closing agent in an amount stated in the Purchase and Sale Agreement. Such funds must be posted within 24 hours of being declared the winning bidder. The winning bidder will be required to pay the Earnest Money Deposit by wire transfer within 24 hours following the conclusion of the online auction. You will be provided with a receipt by e-mail showing that the escrow/closing agent received your Earnest Money Deposit. There are no exceptions to this requirement.


The benefits of the auction process are numerous.  The major advantages to selling on an online auction are the access to potential investors, the sales process is accelerated and has a set timeframe, there are non-negotiable seller documents, typically no fees are involved, usually there is a massive, multi-faceted marketing campaign that maximizes bidder participation and achieving a price through competitive bidding is, oftentimes, the only method available to determine an asset’s true current market value.

By having access to several potential investors the price of your property may get bid up as a bidding war may commence if two parties feel that they have to have the property.

The sale process can be greatly accelerated as a date certain is set and if you receive an acceptable offer the property is sold and closed usually within no more than 30 days.  Thus your total process of selling the property can be shortened.

The documentation is usually standard and thus non-negotiable and favors the seller in the transaction.  There are typically no fees due by the seller.  In the documentation the property is typically sold with the buyer paying all of the escrow fees.

Most online auction companies have a large list of buyers that they mail to, they run advertising campaigns to make sure that the auction is well attended, thus maximizing bidder participation.  If your property is in need of repair, the property is typically sold “as is” and the buyers at auction are typically not intimidated by doing repairs and usually feel that they can get a bargain on the property for a minimal outlay of cash for the repairs.

The biggest benefit to sellers is that you achieve a true current market value for your property as the bids set this value.  You can set a minimum value to assure that you get at least that price, however this sometimes has a way of setting a price in the buyers mind and you don’t get the bidding war that you expected and possibly the true current market value.

As I say throughout my blogs, if I may be of assistance with your real estate questions please contact me, I truly want to help.  My way of giving back is to give away my knowledge.  Thank you for reviewing this blog.