Foreclosed Assets Selling Above Note Price Signal Early Signs of Commercial Real Estate Recovery, Says Advisor

Written by:

Steve Marcinuk

Date:

22 Dec 2025

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Competitive bidding at commercial real estate foreclosure auctions is providing a concrete signal that the market may be entering the initial phase of recovery, according to Mandi Wedin, Founder and CEO of Feroce Real Estate Advisors, who closely monitors auction results as an indicator of capital flow.

“An interesting item I look for regularly is whether the foreclosure auction clears at the note price, or if there’s actual competition that pushes the price above the note,” Wedin explains. “When people are willing to pay more than the note, they see opportunity and are ready to act on it.”

Wedin, who brings two decades of experience managing real estate investment portfolios, notes that several recent auctions have resulted in assets selling for more than the outstanding loan balance. She says this pattern shows genuine buyer confidence, rather than distressed sellers accepting the lowest possible offers.

Parallels to the Post-Great Financial Crisis Recovery

Wedin draws a direct comparison to the early years following the Great Financial Crisis. “Right now the market feels like the early post-GFC recovery—think 2010, 2011, 2012,” she says. “We’re seeing the early signs of recovery as capital cautiously returns to real estate. It’s happening in specific markets and asset classes with strong fundamentals that can hold up during a protracted recovery.”

This selective return of capital is key to understanding current market dynamics. Wedin points out that many assets are still bottoming out and require recapitalization before they can become productive again. “We have a lot of assets that are still bottoming out, and they need to be recapitalized to become productive,” she says.

Resetting Capital Structures

Wedin describes a significant structural challenge: many properties have capital stacks that no longer make sense, with owners, investors, and lenders all underwater. “Many have upside-down capital stacks. The investors, the owners, the operators, the lenders—they’re out of the money,” she explains. Until these capital structures are reset through foreclosure, workouts, or recapitalization, these assets remain stagnant.

She acknowledges the hardships created by foreclosure. “There’s a lot of pain, but when we get to that transaction, capital starts flowing again,” Wedin says. Foreclosure typically represents a loss for the previous owner and their investors. Still, it also sets a new market price and moves the property to a buyer with both capital and conviction.

Not all troubled assets end up in foreclosure. “We’re doing a lot of workouts as well,” she notes. However, successful workouts require a realistic plan for the property’s future. “There needs to be a plan—a clear line of sight for what that asset could become, for the workout to be real.”

For some properties, especially older or poorly located office buildings, that viable plan is hard to identify. “If it’s a very expensive office repositioning—the Class B, mid-block, 1970s office building—that plan is not very appetizing right now,” Wedin observes.

Advantage for Operators Ready to Execute

Wedin emphasizes that the organizations most likely to benefit are those prepared to act as opportunities arise. “Organizations that are focused on executing as those transactions happen, as those opportunities happen, they’ll win,” she says.

She points to a change in what drives investment performance: “Operational excellence is a competitive advantage. It’s not just the buy, it’s the execution.” As more deals involve properties that need repositioning or repurposing, success depends on managers who can carry out complex business plans, not just those who spot undervalued assets.

Wedin adds, “The asset selection is important, but it’s also the asset management execution of the plan.”

Tracking the Recovery

Feroce Real Estate Advisors tracks investment sales volume, foreclosure notices, auction results, and buyer profiles to monitor how capital is moving through the market. The firm provides fractional executive roles, strategic advisory, and board services to institutional investors and operators navigating these transitions.

Whether the current trend of foreclosure auctions clearing above the note price signals a wider recovery remains to be seen. Much depends on how quickly capital finds its way to other distressed assets and whether competitive bidding continues. According to Wedin, recent data suggests the market has moved beyond panic-driven sales and into a phase where buyers are selectively seeking opportunities—a pattern that typically marks the early stages of broader recovery.