Exploring the Advantages of Selling Commercial Real Estate at Auction

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Written by: Ashley Dillard, CCIM | CRER Senior Director | Auction Specialist

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Exploring the Advantages of Selling Commercial Real Estate at Auction

Selling a commercial property is a significant decision for any owner, and exploring the available methods is crucial to ensure a successful transaction.

 

Among the various options, selling at auction has gained popularity as an effective and advantageous approach.

In this article, we will delve into the benefits of selling at auction in the commercial real estate market. By understanding the advantages, sellers can make informed decisions and capitalize on the unique opportunities that auctions offer.

 

Accelerated Sales Timeline: One of the primary benefits of selling at auction is the accelerated sales timeline. Unlike traditional sales methods that can be time-consuming, auctions establish a specific date for the sale. This creates a sense of urgency among potential buyers, leading to faster transactions. By compressing the sales process, auctions allow sellers to achieve a prompt sale and quickly convert their property into liquid assets.

Competitive Bidding Environment: Auctions provide a competitive bidding environment that can generate higher prices for commercial properties. The open and transparent nature of auctions encourages multiple buyers to engage in a bidding war, driving up the final sale price. The competitive atmosphere ensures that the property is sold at fair market value, giving sellers confidence that they have maximized the return on their investment.

Increased Market Exposure: Selling a property at auction provides an unparalleled level of market exposure. Auctions attract a wide range of potential buyers, including investors, developers, and end-users. This exposure is amplified by comprehensive marketing and advertising campaigns conducted by auctioneers or brokerages. The extensive reach of these campaigns ensures that the property reaches a broad audience, maximizing the chances of finding the right buyer who values the property’s unique attributes.

Transparency and Fairness: Auctions are known for their transparency and fairness. The open bidding process allows all interested parties to participate equally and compete on an even playing field. This transparency fosters trust among buyers, as they can witness the bidding in real-time. Sellers also benefit from the transparency of the auction process, knowing that their property is being sold through a fair and unbiased method.

Control over Terms and Conditions: Selling at auction provides sellers with a level of control over the terms and conditions of the sale. Sellers can set the reserve price, which is the minimum acceptable bid, ensuring that the property is not sold below a predetermined value. Additionally, auctions allow sellers to set specific terms and conditions, such as the deposit amount, closing timeline, and other contractual obligations. This control provides sellers with flexibility and the ability to tailor the sale to their specific requirements.

 

Selling a commercial property at auction offers a range of benefits that can enhance the selling experience and maximize the value of the property. From an accelerated sales timeline and a competitive bidding environment to increased market exposure, transparency, and control over terms and conditions, auctions provide unique advantages for sellers. By understanding and harnessing these benefits, sellers can navigate the auction process with confidence and achieve favorable outcomes. To explore the benefits of selling at auction further, consult with a reputable commercial real estate auction specialist, such as CRER, who can provide expert guidance and support throughout the auction journey.

What Property Types Work Well for an Auction: Maximizing Success in Commercial Real Estate Auctions

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Written by: Ashley Dillard, CCIM | CRER Senior Director | Auction Specialist

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What Property Types Work Well for an Auction: Maximizing Success in Commercial Real Estate Auctions

Commercial real estate auctions have gained popularity as an effective method for buying and selling properties.

 

But not all property types are equally suited for auction. Understanding which property types work well in an auction environment is crucial for sellers looking to maximize their chances of success.

In this article, we will explore property types that are particularly well-suited for commercial real estate auctions, helping sellers make informed decisions and achieve optimal results.

Vacant Commercial Properties: Vacant commercial properties are often prime candidates for auction. These properties may include vacant lots, buildings, or office spaces. Auctions provide an opportunity to attract a wide range of potential buyers, including developers, investors, or businesses seeking expansion. The competitive bidding environment of an auction can help sellers achieve market value for their vacant properties quickly and efficiently.

Distressed or Bank-Owned Properties: Distressed or bank-owned properties, including foreclosures or properties in bankruptcy, are well-suited for auctions. These properties often require a prompt sale to mitigate financial losses or meet legal obligations. Auctions attract investors interested in distressed assets and create a transparent process for selling these properties. The competitive nature of auctions can generate higher bids and provide an efficient way to liquidate distressed assets.

Specialty Properties: Specialty properties with unique characteristics or specific target markets can benefit greatly from auction sales. Examples include hotels, resorts, recreational facilities, or healthcare properties. Auctions allow sellers to attract a diverse range of potential buyers who may have a particular interest or expertise in these specialized property types. The competitive bidding environment helps determine the true market value and enables sellers to achieve favorable outcomes.

Development Opportunities: Properties with development potential, such as vacant land or properties with underutilized structures, are ideal candidates for auction. Developers often seek opportunities to acquire properties with growth potential, and auctions provide a platform for them to compete and bid on these assets. Auctions can create a sense of urgency, ensuring a swift and efficient sales process for development opportunities.

Portfolio Liquidation: For sellers looking to liquidate a portfolio of properties or a portion of their real estate holdings, auctions offer an efficient solution. Auctions enable simultaneous sales of multiple properties, attracting a broader range of potential buyers. This approach streamlines the sales process, allowing sellers to efficiently divest assets and reallocate capital for other strategic investments.

 

When considering a commercial real estate auction, understanding the property types that work well in this environment is crucial for sellers. Vacant properties, distressed properties, specialty properties, development opportunities, and portfolio liquidation all align well with the competitive and transparent nature of auctions.

By leveraging the benefits of auctions for these property types, sellers can increase their chances of success and achieve optimal results.

Consulting with CRER can provide valuable guidance and expertise throughout the process.

Contact us today to explore how auction sales can benefit your commercial property and set you on the path to a successful auction experience.

Understanding the Cost of Selling Commercial Real Estate at Auction

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Written by: Ashley Dillard, CCIM | CRER Senior Director | Auction Specialist

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Understanding the Expenses of Selling at Auction for Commercial Real Estate

Selling a property at auction can be an attractive option for commercial real estate owners, offering a streamlined and transparent process that often leads to competitive bidding and favorable outcomes.

 

With that being said, it is essential to have a clear understanding of the expenses associated with selling at auction.

In this article, we will explore the various costs involved in selling a commercial property at auction, enabling sellers to make informed decisions and effectively budget for a successful auction experience.

 

Auctioneer’s Commission: One of the primary expenses when selling at auction is the auctioneer’s commission. The auctioneer’s commission is a percentage of the final sale price and covers the services provided by the auctioneer, including marketing the property, organizing the auction event, and facilitating the bidding process. The commission rate may vary, so it is crucial to discuss this with the auctioneer or brokerage upfront to understand the exact cost involved.

Marketing and Advertising Costs: To attract a wide range of potential buyers to the auction, effective marketing and advertising are essential. Sellers are generally responsible for covering the costs associated with marketing the property, such as professional photography, listing fees, brochures, online promotion, signage, and advertising campaigns. It is advisable to work with the auctioneer or brokerage to develop a comprehensive marketing strategy that aligns with your budget and targets the appropriate audience.

Legal and Administrative Fees: Sellers should also consider legal and administrative fees when budgeting for an auction. These costs may include hiring an attorney to review contracts, prepare legal documentation, and ensure compliance with relevant regulations. Additionally, administrative fees may be incurred for services such as title searches, property surveys, and other administrative tasks associated with the auction process. It is essential to discuss these potential expenses with your legal and administrative advisors in advance.

Property Preparation and Staging: Preparing the property for auction and presenting it in the best possible light is crucial to attracting potential buyers. Sellers may need to invest in property improvements, repairs, or staging to enhance its appeal and maximize its value. These expenses can vary depending on the property’s condition and the desired level of presentation, so it is important to assess and budget for these costs accordingly.

Additional Costs: While the aforementioned expenses are the most common, sellers should also consider other potential costs that may arise during the auction process. These can include appraisal fees, property inspections, insurance, and any outstanding property taxes or liens that need to be settled before the auction. Sellers should consult with their auctioneer or brokerage to identify any additional costs specific to their situation.

 

Selling a commercial property at auction offers numerous advantages, but it is essential for sellers to have a comprehensive understanding of the expenses involved. By being aware of the various costs, sellers can budget effectively and make informed decisions throughout the auction process.

Working closely with a reputable brokerage, such as CRER, can provide valuable guidance and support in navigating these expenses. Contact CRER today to leverage our expertise and ensure a successful auction experience, while effectively managing the expenses associated with selling your commercial property.

When Does an Auction Make Sense? Exploring the Benefits of Commercial Real Estate Auctions

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Written by: Ashley Dillard, CCIM | CRER Senior Director | Auction Specialist

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When Does an Auction Make Sense? Exploring the Benefits of Commercial Real Estate Auctions

Commercial real estate auctions have emerged as a popular method for buying and selling properties, offering a unique and efficient alternative to traditional sales processes.

 

However, it’s crucial to determine when an auction is the right choice for your commercial property.

In this article, we will delve into the key scenarios where commercial real estate auctions make sense, and highlighting the benefits they offer to both sellers and buyers.

 

Time-Sensitivity: One of the primary situations where an auction is advantageous is when time is of the essence. Sellers who need to sell their commercial property quickly, whether due to financial constraints, market fluctuations, or personal circumstances, can benefit from the accelerated nature of auctions. By setting a specific auction date and creating a sense of urgency among potential buyers, auctions expedite the sales process, ensuring a prompt transaction.

Unique or Specialized Properties: Commercial properties that possess unique features, attributes, or a niche market appeal are often well-suited for auctions. These properties may have a limited pool of potential buyers, making it challenging to determine an accurate market value through traditional methods. Auctions attract a diverse range of interested parties, fostering competitive bidding and helping to uncover the true market value of these distinctive properties.

Market Volatility: In uncertain economic climates or volatile real estate markets, auctions provide stability and transparency for both buyers and sellers. The competitive bidding environment of an auction ensures that the property achieves fair market value, eliminating concerns about undervaluing or overpricing. Sellers can have confidence in achieving the highest possible price, while buyers can be assured that they are paying a price reflective of current market conditions.

Distressed Properties: When dealing with distressed commercial properties, such as foreclosures or properties in bankruptcy, auctions offer an efficient and transparent method of liquidation. These properties often require expedited sales to mitigate financial losses or meet legal requirements. Auctions attract a wide range of buyers, including investors seeking distressed assets, facilitating a swift transaction and providing a fair opportunity to acquire these properties at competitive prices.

Divestment and Portfolio Optimization: For property owners looking to divest a portion of their portfolio or optimize their real estate holdings, auctions offer an efficient avenue. Auctions provide a platform to showcase multiple properties simultaneously, attracting a broader range of potential buyers. This process allows sellers to liquidate assets efficiently, streamline their portfolio, and redeploy capital into more strategic investments.

 

Commercial real estate auctions present a compelling option for both sellers and buyers in specific circumstances. Whether you are a seller seeking a prompt transaction, possess a unique property, or are dealing with market volatility or distressed assets, auctions offer distinct advantages.

Additionally, for portfolio optimization or divestment purposes, auctions facilitate efficient sales processes and attract a larger pool of interested buyers.

When you find yourself in a situation where a commercial real estate auction makes sense, it’s crucial to have the support and expertise of a specialized brokerage like CRER. Our team at CRER has extensive experience representing clients at commercial real estate auctions, and we understand the intricacies involved in these transactions.

By partnering with us, you can benefit from our in-depth knowledge, strategic guidance, and personalized representation throughout the auction process. Contact CRER today to leverage our expertise and ensure a successful auction experience, securing the best possible outcome for your commercial property.

Guide to Auction Terminology: Decoding the Language of Commercial Real Estate Auctions

CRER Broker

Written by: Ashley Dillard, CCIM | CRER Senior Director | Auction Specialist

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Guide to Auction Terminology: Decoding the Language of Commercial Real Estate Auctions

Commercial real estate auctions have gained immense popularity in recent years as an efficient and transparent method for buying and selling properties.

 

Auctions provide a unique opportunity for buyers and sellers to engage in competitive bidding, ensuring fair market value is achieved. Navigating the world of commercial real estate auctions can be daunting, especially for those unfamiliar with the terminology commonly used in this specialized field.

In this guide, we aim to demystify auction jargon and equip you with the knowledge needed to confidently participate in commercial real estate auctions.

 

Reserve Price: The reserve price refers to the minimum price set by the seller, below which the property will not be sold. It acts as a safety net for the seller, ensuring they do not have to accept a bid that falls below their desired price. The reserve price is typically not disclosed to bidders and is only known to the auctioneer.

Opening Bid: The opening bid is the initial bid placed by a participant at the beginning of the auction. This bid sets the starting point for the bidding process and can often influence the momentum of the auction. The auctioneer may start the bidding at the reserve price or at a lower amount, depending on the specific auction rules.

Bid Increments: Bid increments are predetermined, incremental amounts by which bidders must increase their bids during the auction. These increments are set by the auctioneer and help maintain an orderly and efficient bidding process. The size of bid increments can vary depending on the value of the property and the intensity of the bidding activity.

Buyer’s Premium: A buyer’s premium is an additional fee charged to the winning bidder on top of the final bid price. This fee is typically a percentage of the winning bid and is used to cover auction-related expenses. It is essential for bidders to understand the buyer’s premium before participating in an auction to accurately calculate their total cost.

Due Diligence: Due diligence is the process of thoroughly investigating a property’s legal, financial, and physical aspects before participating in an auction. Buyers are responsible for conducting their due diligence to assess the property’s condition, potential risks, and market value. It is crucial to review relevant documents, perform inspections, and consult with professionals such as lawyers and surveyors during this phase.

“As Is, Where Is”: The term “as is, where is” is commonly used in commercial real estate auctions to indicate that the property is sold in its current condition without any warranties or guarantees from the seller. Buyers are expected to accept the property’s condition and assume responsibility for any necessary repairs, maintenance, or renovations.

Withdrawal: A withdrawal occurs when the seller decides to remove the property from the auction before a sale is made. This can happen if the reserve price is not met or if the seller has accepted an offer outside of the auction. A withdrawal typically ends the bidding process for that particular property.

Auctioneer’s Hammer: The auctioneer’s hammer is a symbolic tool used to mark the acceptance of a bid and the sale of a property. When the auctioneer strikes the hammer, it signifies the end of the bidding process and the successful purchase of the property by the highest bidder.

 

At CRER, our brokerage specializes in commercial real estate auctions, and we have a deep understanding of the intricacies involved in navigating this dynamic market. We are here to provide you with expert guidance and representation throughout the auction process.

By leveraging our extensive experience and market knowledge, we ensure that our clients make well-informed decisions and achieve the best possible outcomes.

If you’re considering participating in a commercial real estate auction, don’t hesitate to reach out to our dedicated team at CRER. Let us put our expertise to work for you, ensuring a successful auction experience and maximizing the value of your investment.

Contact us today and benefit from the advantage of working with a brokerage that specializes in representing clients at commercial real estate auctions.

Maximizing Profits with Commercial Real Estate Auctions

CRER Broker

Written by: Ashley Dillard, CCIM | CRER Senior Director | Auction Specialist

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Maximizing Profits with Commercial Real Estate Auctions

In the ever-changing landscape of commercial real estate, asset managers and bankers often find themselves at the crossroads of decision-making.

 

One path leads to traditional sales, while the other opens up the world of real estate auctions. The latter, though seemingly unconventional, can often lead to maximized profits and efficiency, particularly when you engage with a seasoned expert in the field, such as Chicago Real Estate Resources, Inc. (CRER).

 

Why Auctions?

As an asset manager or banker, you might be wondering: why auctions? The answer lies in the unique advantages of CRE auctions that can help you maximize your profits:

  • Transparency: Auctions offer a transparent sales process, where all bids are visible. This openness can drive up the price as bidders compete against each other.
  • Efficiency: Auctions can speed up the sales process, reducing the holding costs associated with an extended sales period.
  • Reach: Online auctions, in particular, can reach a global audience, increasing the pool of potential buyers.
  • Market Value: Auctions ensure that properties are sold at market value, as the competitive bidding process reflects the true demand for the property.
  • Certainty of Sale: With auctions, the highest bid wins, ensuring that the property will be sold if it meets the reserve price.

 

In conclusion.

While traditional sales methods certainly have their place, auctions can provide a dynamic and profitable alternative. Engaging a firm like CRER, with our breadth of experience and commitment to client service, can make the process of venturing into commercial real estate auctions less daunting and more rewarding.

Stay tuned for our next article where we delve into specific strategies for preparing your property for auction and attracting the right bidders. Until then, remember: when it comes to maximizing your profits in commercial real estate, consider auctions, and consider CRER.

Contact Us

Chicago Real Estate Resources, Inc.
800 W. Diversey Pkwy. #300
Chicago, IL 60614
773-327-9300
info@CRER.com

About CRER

CRER (Chicago Real Estate Resources Inc.) is a full-service, commercial real estate firm devoted to providing exceptional service for your every real estate need. Whether it is commercial and investment property sales, leasing, tenant representation, property management or receivership services; we are here to assist you around the clock.
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