House Auctions provide a number of options for investors. The property up for auction may be the result of foreclosure, or the best option to offer exclusive or unique homes that may be a challenge to sell otherwise. Prospective buyers need to research the property in advance, and develop a rudimentary understanding of how property auctions work prior to making their first bid.

Bidders compete with the bank or lending agency at foreclosed home auctions. When the bank considers the bid too low, it counters with another offer and will continue to go back and forth until a reasonable bid is achieved. Most foreclosures are sold “as is”, so the bank is not liable for property damage or structural problems.

Bidders compete with each other at real estate property auctions conducted by auction companies. The seller and auction specialist determine the comparable market value for the house. Where there are no comparable market values for the house, a minimal, or reserve price is established. Sometimes the property is offered to the public as an “absolute auction”, which means there is no reserve price and the property goes to the highest bidder. Expect a commission, or buyer’s premium, added to the winning bid price.

Typically, house auctions are held onsite. Bidders are expected to arrive early on auction day as bidding requires registration. Pre-registered bidders check-in and make last minute inspections during the preview period-an hour or two prior to the start of the property auction. Some registrants may be limited to the purchase of a single property. Winning bidders use cashier’s checks or personal checks for their down payment. Go over the terms of sale and property auction rules carefully.

House auctions start with an overview that includes the bidding methods and any final changes or disclosures. Auctioneers may conduct a practice auction. The bidders may be issued a paddle to signal they are willing to meet the bid price that the auctioneer is stating. Bidding comes to an end when the price reaches the point only one bidder is willing to pay.