Whether you’ve flipped countless properties while investing in real estate, or you’re just getting familiar with the market, you’ve likely heard horror stories about commercial real estate auctions. It’s true, commercial real estate investment comes with risks, but all investment does. Regardless, much of what you’ve heard about this specific area of the market isn’t true, or at least it’s misconstrued. It’s time to set the record straight on some of the most common myths about real estate auctions.

Myth: A property is up for auction because there’s something wrong with it.

When the housing market collapsed and foreclosures spread like wildfire across the nation, many of the properties were put up for auction, but not before being abandoned or destroyed by owners and banks. That taste of distressed properties still lingers at today’s auctions, but commercial real estate auctions are different. In most cases, business buildings up for auction are a deliberate choice by the owner who wants a fast sale, and not a forced situation because of financial challenges.

Myth: You’re buying “blind” at a commercial real estate auction.

Buying commercial property at an auction doesn’t mean you need the investor gods on your side for the property to be in good shape. Owners of commercial real estate want the best offer possible, so they’re usually open about the property and its features to attract as many potential buyers as possible.

Myth: Commercial real estate auctions are loaded with hidden fees.

As a real estate investor, you should be used to doing your homework. Partner with an experienced commercial real estate auctioneer and legal team to ensure there are no liens or back taxes due on the property. While you may be asked to prove you have the funds to purchase the property, you should never be asked to pay to participate in an auction.

Myth: Real estate auctions are only held for foreclosed upon properties.

You are not taking advantage of someone else’s misfortune by participating in a commercial real estate auction. Again, because of the turmoil the market saw in the Great Recession, there’s a misguided belief that all auction properties are bank foreclosures, and that simply isn’t true. It’s extremely rare that a business is being pushed out by a lender, but rather that the owner has decided to move the business or is making a calculated financial decision to grow their investment.

Myth: Auctions are rigged to meet a certain selling price.

Tough regulations surround commercial real estate transactions, so the idea that the property owner could plant a bidder to increase the price shouldn’t be a concern. Sound auction houses will not allow questionable behavior as their reputation could easily be tarnished. If you’re concerned, or just curious, about the bidding process, attend a commercial real estate auction and just observe to understand the procedure.

As with any investment, do your research. Look up the auction house name, the property owner, and any liens against the unit. When you do your due diligence, buying a commercial real estate property through auction isn’t any riskier than a traditional purchase.

When the housing market collapsed and foreclosures spread like wildfire across the nation, many of the properties were put up for auction, but not before being abandoned or destroyed by owners and banks. That taste of distressed properties still lingers at today’s auctions, but commercial real estate auctions are different. In most cases, business buildings up for auction are a deliberate choice by the owner who wants a fast sale, and not a forced situation because of financial challenges.Buying commercial property at an auction doesn’t mean you need the investor gods on your side for the property to be in good shape. Owners of commercial real estate want the best offer possible, so they’re usually open about the property and its features to attract as many potential buyers as possible.As a real estate investor, you should be used to doing your homework. Partner with an experienced commercial real estate auctioneer and legal team to ensure there are no liens or back taxes due on the property. While you may be asked to prove you have the funds to purchase the property, you should never be asked to pay to participate in an auction.You are not taking advantage of someone else’s misfortune by participating in a commercial real estate auction. Again, because of the turmoil the market saw in the Great Recession, there’s a misguided belief that all auction properties are bank foreclosures, and that simply isn’t true. It’s extremely rare that a business is being pushed out by a lender, but rather that the owner has decided to move the business or is making a calculated financial decision to grow their investment.Tough regulations surround commercial real estate transactions, so the idea that the property owner could plant a bidder to increase the price shouldn’t be a concern. Sound auction houses will not allow questionable behavior as their reputation could easily be tarnished. If you’re concerned, or just curious, about the bidding process, attend a commercial real estate auction and just observe to understand the procedure.

As with any investment, do your research. Look up the auction house name, the property owner, and any liens against the unit. When you do your due diligence, buying a commercial real estate property through auction isn’t any riskier than a traditional purchase.