House Auctions Explained

The house auction participants may gather on site at the property.

A housing auction is the sale of property through public, competitive bidding. Auctions are a quick way to sell real estate because the prospective buyers are prepared to purchase property that day.

Types

There are three kinds of house auctions, according to the National Association of Realtors. The first is an absolute auction where the highest bidder gets the house regardless of the price. The second is a minimum bid auction where there is a published minimum price. The third type of auction is a reserve auction that has to meet the seller's approval.

Participants

House auctions involve the sellers, which may be the homeowner, bank, mortgage company or a governmental agency, as well as the prospective buyers. The house auction participants may gather on site at the property, or in a public setting if there are multiple properties for auction that day.

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Real estate agents may advertise the home that will be auctioned so that prospective buyers have a chance to drive by the house and see it. Often the house up for auction is listed on the Multiple Listing Service (MLS), which is a database of all homes currently for sale.

Purchase

Prospective buyers must register for the auction and prove that they have the funds available to purchase the property. Some auctions require prospective buyers to have a cashier's check on them to leave a deposit. Other auctions will require the winning bidder to immediately come forward and pay for the property in full. The buyer may be responsible for deed, advertisement, tax liens and recording fees depending on the auction.

References

• Foreclosure.com: House Auctions
• National Association of Realtors: Auction: The Basics & Benefits