Commercial real estate auctions channel a growing share of CRE transactions, with investors buying and selling properties at a pace traditional sales rarely match.
It once carried the stigma of distressed-only assets, but nowadays, even stabilized and tenant-occupied buildings with leases already producing revenue are listed and sold through auctions.
Is buying at auction worth the risk?
Buying at auction can be an effective way to secure property quickly and, in some cases, at a lower price than the open market. But like anything else in CRE investing, that speed comes with trade-offs.
You’re locked in once the gavel falls, and there’s little chance to renegotiate terms or walk away if new issues come to light.
For sellers, auctions are relatively low-risk because properties are sold “as seen” and because the legally binding nature of the process gives them certainty that the deal will close.
The stakes are definitely higher for buyers, so you’ll want to understand both the potential upsides and the risks before raising your paddle (or clicking the bid button).
What are the advantages of purchasing a commercial property at auction?
1. Bargain potential
Some properties are listed below market value to attract bidders. You could walk away with an asset at a price well under what you’d pay in a private sale if you’ve done your homework.
2. Transparent pricing
Auctions remove a lot of the back-and-forth you see in traditional negotiations. You can track bids in real time and know exactly what it will take to win.
3. Equal access to information
Everyone gets the same legal pack and property details, so there’s no inside track — what you see is what every other bidder sees.
4. Wider reach, bigger competition
Because auctions (especially online ones) draw buyers from across regions, properties get more exposure. That creates more competitive bidding but also reassures you that the price reflects fair market interest.
5. Speed of completion
Auction sales don’t drag on. The clock starts once the hammer falls, often with a 28-day deadline to close. Deals are wrapped up much far faster than in a conventional sale.
6. Certainty once the bid is accepted
In a CRE auction, a winning bid creates a legally binding contract. You have much more assurance that the transaction will go through, unlike in traditional deals that can collapse late in the process.
7. Range of opportunities
You’ll find more than distressed stock in CRE auctions these days. There are plenty of stabilized, income-producing properties and unique assets you might not see elsewhere.
What are the disadvantages of purchasing a commercial property at auction?
1. Risk of overpaying
Competition in the room can push prices beyond true market value. You could walk away paying more than the property is worth if you get caught up in the bidding. Your best defense is to do solid research ahead of time.
2. Limited due diligence
It’s true that auction houses provide legal packs that you can review in advance, but you won’t have the same time or flexibility to investigate as you would in a traditional sale. Problems like title issues or outstanding debts might not surface until after you’ve already committed.
3. No chance to renegotiate
The contract is binding once you’ve placed the winning bid, so If new information comes up later — say, unexpected repairs or tenant issues — you can’t go back and change the deal without facing penalties.
4. Sold as seen
Properties are usually sold in their current condition. This means that you’re accepting whatever problems exist, from hidden maintenance issues to title complications. Sometimes you won’t know the full scope until after closing.
5. High upfront costs
Winning bidders typically have to immediately pay a 10% non-refundable deposit along with auction fees, appraisal costs, and other expenses.
6. Tight deadlines
Most auctions require completion within a set timeframe (often 28 days). You risk losing your deposit and the property itself if you can’t arrange financing or if you miss the deadline.
What kind of commercial properties end up at auction?
You might think auctions are only for foreclosures or bankruptcies, and it’s true that banks use them to move distressed assets quickly.
But that’s not the whole picture. Plenty of income-producing properties go under the hammer, too.
The owners of these stable CRE properties might decide to turn to auctions because they want speed and certainty.
They know that bidders will compete openly and that the process will wrap up quickly, so they don’t have to wait months for a traditional sale to wind its way through negotiations and paperwork.
Auctions were mostly for rural land or estates not long ago, but today you’ll see everything from office buildings and retail centers to luxury homes and farmland.
If you’re willing to browse, auctions can expose you to property types you might not find elsewhere.
How is the bidding set up?
Not every property auction works the same way. Some guarantee a sale no matter what, while others give the seller the right to walk away.
- Absolute auctions sell the property to the highest bidder no matter what the final price is. There’s no minimum threshold or seller veto — if you place the top bid, you win.
- Reserve auctions require you to meet a minimum price, and even then the seller can decide whether to accept your bid.
- Live auctions put you in the room with an auctioneer. Bids move quickly and the pace is set in real time.
- Online-only auctions have you place bids through a website, with clear start and end times so you know exactly when the window closes.
- Live-stream auctions let you choose between showing up in person or bidding remotely as the auction unfolds.
- Sealed-bid auctions ask you to submit your bid privately, and you won’t see competing offers until the auction ends.
Before you register, make sure you know whether the auction is “absolute” or “reserve.” That detail can change the entire outcome.
And if you’re looking outside your local market, online-only and live-stream formats might be worth looking into because they let you compete without ever leaving your desk.
What’s it like participating in a CRE auction?
Auctions for commercial properties rarely move in a straight line.
Early bids can trickle in slowly, but once the reserve price is met, things heat up fast.
At that point, you’ll need a strategy because the property could be gone in minutes.
If you win the bidding, the auctioneer will walk you through contracts, payment, and deadlines.
Closings usually happen within about 28 to 30 days, which is lightning-fast compared to a traditional sale.
Of course, you won’t win every time and it can sting to lose a property you had your eye on in the final moments.
But you can think about it this way: Every auction sharpens your sense of pricing and timing — that’s knowledge you can use to bid better the next time around.
So, risk or reward?
Buying commercial property at auction isn’t for everyone. You need to be comfortable making quick decisions and tying up capital fast.
You also need to accept that there’s limited room for due diligence.
But it can give you the chance to secure a property below market value and add a cash-flowing asset to your portfolio in a matter of weeks. The key is knowing your limits and sticking to your numbers.
How Private Capital Investors Can Help
At Private Capital Investors, we know how crucial timing is when you’re competing at auction. That’s why we provide commercial real estate bridge loan designed to move fast, with approvals in as little as 24–48 hours and funding in as few as 14 days.
We work with investors across markets, from foreclosed retail centers in Houston to lease-up properties in Phoenix and value-add multifamily in Miami. Approvals take as little as 24–48 hours and funding is released in as few as 14 days, so you’ll have the confidence to compete and close on time.
Call us at 972-865-6206 or email info@privatecapitalinvestors.com.
