Buying commercial real estate at auction can be a great way to get a great deal on the property. Adnan Vadria, an experienced real estate investor, shares his five tips for successfully buying commercial real estate at auction. With Adnan's guidance, you'll be able to make informed decisions and find the right property for your needs.
In most auctions, you are required to close within a short time period (~30 days) of the auction closing. That means that it is difficult to obtain a conventional loan for the property.
Adnan Vadria says you should have a credit line available or be in contact with a bank ready to lend you money when the deal closes.
This is an important point because it could be the only time you’re allowed to see the property. A lot of auctions only offer certain dates when they will let people tour a home prior to being auctioned off. Adnan says if available, also walk into the stores and talk to the tenants (if occupied) about their units and any issues with them.
There are many different types of auction formats. Know the different types of auctions and definitions, such as reserve vs absolute, and online vs sealed bid.
Each type may differ according to the auction company hosting the sale. Some specialize in real estate, while others focus on antiques or fine art. While auctions can be intimidating for novice bidders.
If you think you will win it and see the bid go over, don’t worry, and be patient. Sometimes those bids are artificially inflated to drive the price up. Adnan says even after it has ended and you think that the matter is closed, don’t be surprised if they call back to say that there are additional expenses. If the client tries to negotiate more money out of you, stand your ground.
This doesn’t just mean hiring a broker you may also need to hire a real estate attorney, environmental firm, roofers, and inspectors. With most of the auctions, you are required to do all your due diligence upfront. Before purchasing a building, make sure that your team has thoroughly reviewed all the material sent to you by the seller.
