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How to Buy a House at Auction

Buying a property at a real estate auction can snag you a great deal -- if you know what you're doing.

[Updated: Feb 09, 2021 ] Jan 11, 2020 by Liz Brumer

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Foreclosure Auction REO Auction Tax Deed Auction Federal Auction Private Auction
A public auction conducted by the county to sell a property after it has been foreclosed. Can be held online or at the county courthouse. A public auction conducted by a third-party company or real estate agent after a property goes through the foreclosure auction but is not sold to the highest bidder. It instead is sold back to the bank or lender and is now being auctioned as an REO.
Can be held online or at the county courthouse.
A public auction conducted by the local jurisdiction for the collection of unpaid taxes.
Some states allow the sale at auction to be redeemed while in others, the sale is final. 
Can be held online or at the county courthouse.
A public auction conducted by governmental agencies like the IRS for properties that were seized for nonpayment of federal income taxes or criminal activity or from surplus.
Typically held online by the government agency or a third-party auction company.
Conducted by a third-party auction company or real estate agent on behalf of the property owners, who hope to increase their sale price by using an auction method to sell the property.
This method is far less common than public auctions.
Can be held online or at the property itself.
Absolute Auction Minimum Bid Auction Reserve Auction
The property is sold to the highest bidder with no minimum bid requirements. If there is low competition at the auction and the highest bid is $250, the winning bidder could purchase a property for $250. The seller sets a minimum bid, and the property is awarded to the highest bidder who meets or exceeds the minimum bid amount. If the minimum bid is not met, the property is typically returned back to the selling party. Bids are more like an offer, and the seller reserves the right to accept or reject the highest bid within a specific period after the auction is concluded.
High competition auction High competition auction Low competition auction
older houses in a chicago neighborhood

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Pros of Real Estate Auctions Cons of Real Estate Auctions
• Potential to buy a property at a significant discount.

• Fast closing.

• High competition -- pushing bids up and discounts down. • No inspection periods.

• Could buy a junk property (especially if you can't get inside the property before the auction).

• Need cash at closing (traditional financing is rarely an option).

• Some states have redemption periods.

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