Question 1

What is the biggest mistake buyers make at commercial real estate auctions?

Accepted Answer

Underprepared underwriting. Commercial real estate auctions are as-is sales with no post-bid contingencies, you are bidding on a property you need to have substantially underwritten before the auction. Buyers who skip environmental review, don't read the title commitment, or fail to walk the property lose money when problems emerge post-closing. The preparation investment for an auction should be nearly as comprehensive as for a negotiated sale, completed in a compressed timeframe.

Question 2

What deposit is typically required at a commercial real estate auction?

Accepted Answer

Deposits at commercial real estate auctions typically range from 5% to 20% of the purchase price, due either at the time of the winning bid or within 24-48 hours. Bankruptcy auctions typically require a certified check or wire transfer deposit of 5-10% at the auction. Foreclosure sale deposits (at courthouse steps) are often required immediately, you need to arrive with a cashier's check. Failure to deliver the required deposit voids your winning bid and may trigger legal liability.

Question 3

How do I access commercial real estate auction listings?

Accepted Answer

Major platforms include Auction.com (predominantly residential but has commercial listings), Ten-X Commercial (focused on commercial), Williams & Williams (regional), and Bid4Assets (government and bank REO). Bankruptcy court auctions are found on PACER and in trade publications. Foreclosure sale calendars are published in county legal newspapers and increasingly online through county recorder sites. Special servicer auctions are typically marketed through CoStar and the servicer's preferred broker network.

Question 4

Can I get financing for a commercial real estate auction purchase?

Accepted Answer

Yes, but you need pre-committed financing before the auction, conventional financing contingencies are not permitted in auction sales. Hard money lenders and debt funds can provide fast-close financing commitments that allow you to bid with non-cash capital. Some buyers use a bridge loan facility pre-established with a lender specifically for auction purchases. The cost of this pre-committed financing (origination fees, higher rates) should be built into your underwriting when determining your maximum bid price.

Question 5

What are reserve prices in commercial real estate auctions and how do they affect bidding?

Accepted Answer

A reserve price is the minimum price the seller will accept, below the reserve, the winning bid can be rejected. Some auctions are "absolute", no reserve, the highest bid wins regardless of price. Court-supervised auctions (bankruptcy, receivership) are typically absolute auctions. Lender-conducted auctions may carry hidden reserves. Understanding whether an auction has a reserve, and estimating what it might be, is part of pre-auction preparation. Bidding to the reserve in early rounds and monitoring seller behavior reveals reserve information.