Is it better to sell by auction or retail?

Question

Hello, I am trying to sell a 30+ unit multifamily property in a city in upstate New York. I am considering listing it as an auction deal with Marcus and Millichap with a reserve. Does anyone have experience with that? It's attractive to me because of the likely shorter turn around time for the whole deal. Buyers will have to be coming in cash and high deposit, due diligence upfront. If the agreed reserve price with broker is satisfactory to me, is there any reason to prefer a traditional listed deal?

Bill B. · Answer

I’m going to start all future posts with what @Kevin Sobilo said…

imagine there are 100 buyers for your place in a traditional sale. . 70 of them need to get financing in place or need an appraisal/inspection completed for their existing contingent financing. Even if it’s hard money.  5-10 of them need time to get their partnership formed, contributions collected, or whatever else stops them from buying in 7-14 days.  and another 5-10 of them have been burnt and wouldn’t buy without their inspector walking it.  That means 80-90% of your possible buyers aren’t going to make an offer. If someone in the remaining 10-20% was going to pay more and offer cash with a quick close than anyone in the 80-90% you win. If someone in the 80-90% would have paid more that’s what the auction cost you. Maybe it’s only a 5% discount on selling price, maybe it’s 20% or more. Luckily it’s a price you’ll never know.

Mohammed Rahman · Answer

Hey Ethan,

For a 30+ unit multifamily in upstate New York, the question of auction vs. retail isn’t really about “which is better” but rather “which aligns with your priorities.” Both can work; the right choice depends on whether you value speed and certainty or price and competition more.

@Kevin Sobilo made many great points. If you truly believe the reserve will protect you, you’re likely setting it high enough that you risk the property not selling at all. That undermines one of the auction’s main benefits (certainty and speed) because you could end up with an unsold asset and still need to relist or renegotiate later.An auction really only makes sense if you need liquidity quickly and are willing to accept a potentially lower price in exchange for speed and certainty.For a 30+ unit multifamily where you’re not under that kind of pressure, a traditional listing usually provides more flexibility, better price discovery, and a stronger chance of maximizing net proceeds.Happy to answer any additional questions — just reach out!

Kevin Sobilo · Answer

@Ethan Borshansky, a few comments:

1. So, you think the auction sounds better because you think they will pay cash and close fast? The downside is that means a LOWER sale price.

Its no different than any other sale. If you demand favorable terms you lose on something else aka price.

2. If you think the reserve price will protect you, then it sounds like you plan to set the reserve fairly high and might not get a buyer at all.

3. You say, "due diligence" up front. People are unlikely to hire professional inspectors to go through a property they are planning to bid on. So, that means, they are losing out on some of the due diligence they get in a traditional sale. That again means potentially a lower price they will be willing to pay.

4. Offhand I would consider an auction only if I needed the money fast and was willing to sell on the cheap side to make that happen.

Caleb Brown · Answer

Retail will give you the broadest net and attract the most buyers. Auction properties are many times discarded by investors. They don't want to wait for that specific time to watch the bid and try. If you aren't desperate find a reputable multi family broker that will get it sold for you.

Janice Carter · Answer

I think auctions can work well for speed and certainty, especially if pricing is realistic and demand is strong. The main tradeoff vs. a traditional listing is potentially leaving money on the table if competitive bidding doesn’t materialize. If your reserve truly reflects market value and you value timeline certainty over maximizing price, an auction can be a solid option.

Is it better to sell by auction or retail?

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