How Does Selling Commercial Real Estate Through A Online Auction Compare To A Tr

Posted by jason michalak on June 6th, 2016

To bid or not to bid: That is the question. This line from Shakespeare's Hamlet sums up the scenario of the present day real estate auction. However, bidding is one of the many things that have to be taken into consideration when you want to sell or buy commercial real estate through an auction. Auctions date back to the time of Shakespeare, but it is only recently that people have started using them to sell all kinds of residential and commercial properties; up until the beginning of the 21st century, auctions were largely seen as a method to sell trophy homes and distressed properties.

As with any other new development in any realm of business, online auctioning was considered uncharted territory by many about half a decade ago; however, things have dramatically improved in the last couple of years. Most of the real estate auction companies in California or other parts of the US are licensed and they are strictly compliant with real estate brokerage laws. All of these points should be analyzed by participants and they should develop a good understanding of the process before taking the leap. If we compare this with the participants of traditional sales, we will come to know that they understand the process well enough. But, this isn't the case with online auctions; you need be diligent to understand the process. And it is not just this difference that pits both apart from each other; there are several others points that elucidate this difference.

In an online commercial or residential auction, much of the diligence has to be taken care of by the seller; however, marketing of the seller's assets will be done by the auction company. On the other hand, the buyer is responsible to do the diligence by themselves in a traditional sale. What the seller gets with an online auction is control of the proceedings; reducing the time period between listing and closure, deciding the terms of the purchase agreement, etc. Online auctions are now seen as quite an effective tool for estate and tax planning as well as exit strategies.

Though not required, diligence is equally helpful for the buyer. It is very important for the buyer to thoroughly go through the terms and conditions of an online auction. Understanding these terms will help the buyer avoid future complications. Based on what information is provided by the auction company and the seller, the buyer can do his own diligence before signing the purchase agreement.

As we can see that online auctions have many beneficial nuances that a traditional sale doesn’t. So, it becomes all the more important for both buyers and sellers to clearly understand the process, as it has the potential of helping them land favorable deals from their individual perspectives.

Author's Bio: The author is a blogger. This article is about commercial real estate online auctions. For more details: https://www.fre.com/commercial