The property is part of the €10.3 million portfolio of buildings which was on offer at the sale, at the Shelbourne Hotel in Dublin.
The auction included 100 lots ranging from investment apartments with tenants already in place to industrial units and offices.
Sold for its reserve price, the Sandhouse Hotel is located on a 3.2 acre site overlooking Donegal Bay. It includes planning permission for 16 apartments as well as the 55-bedroom hotel, which also has a spa on site.
An apartment at Westside Apartments in Letterkenny was also sold at the auction for €29,000 while another investment flat in the town sold for €38,000.