All Collections
Useful Information
How to Bid on an Auction Home
How to Bid on an Auction Home

If you’re looking for an affordable house or a property to invest in, use this guide on how to bid on auction homes to get you started.

Zoe Z Littlejohn avatar
Written by Zoe Z Littlejohn
Updated over a week ago

If you’re looking for an affordable house or a property to invest in, you may have considered buying a home at auction. However, the idea of having to bid at an auction can be daunting, especially with the fast pace, rules, procedures, and competition. Fortunately, there are best practices you can follow to ensure you get a great property at an affordable price. To help you get started, we’ve created this guide on how to bid on auction homes. Below, you’ll learn more about auction homes and how you can bid at an auction.

Understanding Auction Homes

Before diving into the best ways to bid on a property, let’s better understand what an auction house is. An auction house is a company that helps facilitate the selling of homes, which are typically foreclosed or bank-owned. However, government agencies can also hold auctions on properties that they own. At an auction house, prospective buyers and investors congregate and bid on homes, with the highest bidder winning the auction.

Auction houses can conduct sales in-person or online. In-person auctions are typically held at public venues, such as county courthouses. Online auctions can take place with auction houses that offer website bidding, such as ServiceLink Auction, where bidders can register and bid on properties from the comfort of their own home or office. Real Estate auction houses sell properties that are usually foreclosed, bank-owned, or short sale.

Ways to Bid at Auction

How does house bidding work? There are a few different ways you can bid at an auction, from online auctions to auctions at a courthouse. The route you choose depends on your preferences and comfort level, as some methods can be more tactical and calculated. Here are your bidding options:

  • Government auctions: Government agencies, such as the US Department of Housing and Urban Development, the Internal Revenue Service, and the US Department of Treasury, often possess homes from homeowners who fail to pay property taxes and income taxes or are involved in certain crimes. When they obtain these homes, they will hold auctions to help offset any of the expenses the original homeowner failed to pay with the money earned from the sale of the house.

  • Courthouse auctions: Prospective buyers will gather at the county courthouse to bid on properties from various mortgage lenders or banks, known as foreclosure auctions. These auctions are cash only in the form of a cashier’s check. Depending on the county and state, you may be required to bring 100% of the funds with you or a percentage of your offer at the time of the sale, with the remaining amount due within a timeframe provided, typically within 24 hours. Since foreclosure auctions are the first auction type a property may go through, the sellers are often highly motivated to sell the property, which could benefit the buyer.

  • Online auction: Today, you can find homes for sale at an online auction through auction houses such as ServiceLink Auction, where you can bid on bank-owned REO, Recently Foreclosed, and Short Sale homes from the comfort of your own house. Online auctions make it easy for bidders to compare various properties in a less stressful environment where emotions can run high. Additionally, financing may be considered on select properties, and interior access to view the property may be available.

Now that you know the different types of auction homes, it can help you choose a type of auction that works for you. You may like showing up in person at a courthouse or prefer to focus at home and bid at an online auction. Regardless, knowing how to prepare and bid at an auction house like ServiceLink Auction may help you get a great opportunity. In the next section, let’s explore the steps you may expect when bidding at an auction.

Auction Bidding Made Easy

Getting Ready to Bid at a Foreclosure Auction

How do I bid on a home at a foreclosure auction? This is a common question for many looking to win an auction home. To ensure your ideal purchase, here are some of the top tips:

  • Arrive early: If you’re going to an in-person auction, such as at a county courthouse, arriving early is best. By arriving early, you can choose a spot you’re most comfortable in, such as the front row or the back, and have time to talk to other bidders to get an idea of price ranges.

  • Create a bidding strategy: Auctions can be cutthroat, which means you need a plan going into an auction that you can stick to. For example, some bidders prefer to bid closer to the end of an auction to catch the lead bidder off guard, while others prefer bidding early to set the tone and express their interest.

  • Do your research: One of the best ways to bid on a house is to go to an auction prepared. If information is available, research some homes up for auction, such as their location, nearby schools, neighborhood trends, and their condition. Doing so can help ensure you place a bid on homes that meet market conditions.

  • Dress appropriately: If attending an in-person auction, dress the part. Dressing in business casual attire shows other bidders and the auctioneer that you’re serious about purchasing a home and are confident in your decisions. Stakes can be high at auctions, and dressing professionally can intimidate other bidders, reducing the chances of them bidding against you.

  • Set a maximum bid: Emotions can quickly run high when you bid at an auction. When this happens, bidding on a house outside your budget or above market value can become possible. Before going into any auction, set a maximum bid for yourself. This way, if you find yourself in a bidding war, you’ll know when to back out.

  • Have your financing ready: If you are the winning bidder, you may be required to pay using a cashier’s check or wire transfer within a short window. You could lose out on purchasing the property and your deposit, if necessary, by not having your financing in place.

With these tips on the best ways to bid on a house, you’ll be able to go to a Foreclosure auction confidently. There are also different ways you can bid at auction, such as at online, which we’ll uncover in detail in the next section.

Getting Ready to Bid in an Online Auction

Before you bid on a property, make sure to do your due diligence. It’s important that you are well-versed in the property and feel comfortable purchasing it if you are the winning bidder.

Once you are ready to bid, register for the auction. After registering, you can start bidding on any assets within that auction event as soon as the auction begins.

Bidding in an Online Auction

There are two ways to bid on the Property Details Page of the asset or from your Dashboard under your Saved Listings if you favorited the property.

When an auction has opened, a countdown will appear in the bid box displaying how long you have to submit your final and best offer on the property. Under the countdown, you will see the “Starting Bid.” This is the starting amount for that asset. The bid you enter must be at least the “Starting Bid” amount.

You either enter your bid into the field or adjust it using the plus (+) sign.

Minimum Online Bid Increments

This amount is the minimum additional increment you must enter to place a bid. For example, if the “Current Bid” on your property of interest is $150,000 and the minimum bid stated on the Property Details Page is $2,000, your next bid must be $152,000 or higher. If you place a bid higher than $152,000, this becomes your “Proxy Bid.”

Proxy Bid

Don’t have time to sit at your computer and outbid your competitors in an auction? No need! Use our “Proxy Bid” system to set your maximum bid and walk away. Here’s how it works:

Say you want to place a bid on a property and the maximum you will pay is $250,000. The “Starting Bid” is $200,000. Enter $250,000 on the Property Details Page when the auction begins. You will be the current high bidder at $200,000 since that is the “Starting Bid.” As other participants place bids, the system will bid you up in increments, keeping you the high bidder until your maximum proxy bid has been reached. If your maximum “Proxy Bid” is reached and you are outbid, you will receive an email and on-screen notification allowing you to enter a new “Proxy Bid.”

Highest and Best

Pre-Auction

If you register for an auction and a bidding box is available before the auction dates, this indicates that pre-auction bidding is available. You can submit a single sealed offer on the Property Details Page. If there are multiple offers on a property when the pre-auction period ends, our Bid Review team requests each party’s Highest and Best bid to determine the most viable offer. Each party is notified and given the same deadline to respond with their Highest and Best. When all parties have provided their Highest and Best or the deadline has expired, our Bid Review team will submit the highest offer to the Seller for consideration.

During this Highest and Best process, all parties are blind, and the Bid Review team cannot share information regarding any other offers. The property remains available for bidding until the Seller receives an “Accepted Offer.”

Online Auction

Please note that most properties in online auctions have a “reserve,” which is the unpublished minimum price a Seller is willing to accept. The Seller reserves the right to accept bids below the reserve. Although the reserve is the ideal price a Seller wishes to get for their property, it is not set in stone. It is in your best interest to conduct your due diligence on the property to provide an educated offer based on the information you uncover about the property before participating in the auction.

If you are the highest bidder upon auction close and you have not reached the Seller reserve, you may get a call from our Bid Review team for your Highest and Best offer. Your Highest and Best offer should be the maximum amount you are willing to pay for the property. The Bid Coordinator assigned to the property will communicate your Highest and Best offer to the Seller. The Seller reserves the right to counter your Highest and Best and begin negotiation to reach a mutually agreeable price. The contract process begins upon the Seller’s approval of the offer.

Contact Us

Now that you know how to bid on auction homes, it’s time to get started. ServiceLink Auction is a premier online auction house with foreclosed and bank-owned homes for sale. At ServiceLink Auction, we streamline the bidding process, so you may work on shorter timelines and start investing today. Contact us to learn more about how bidding on our platform works.

Did this answer your question?