How Do Property Auctions Work?

Inspecting the Property

Once a property comes up for auction, potential buyers need to research the property thoroughly in advance of the auction date. There will be a notification in the newspaper in the "Legals" section of the classified ads that announces the auction date and the address of the property. You can perform a basic search of the property at your local courthouse to determine its age and ownership history. Buyers are also expected to have their own building inspections conducted, including an inspection for lead paint. This expectation is often included in the advertising for the property auction.

Location

Some municipalities allow properties, usually foreclosures, to be auctioned off on the steps of the county courthouse. If this is the case, the date and time of the auction will be announced in the newspaper in advance. The county lawyer who conducts the auction may not be able to answer any questions about the property and will simply ask for bidders, closing the auction when the highest bidder has voiced a bid. The highest bidder is then legally obligated to pay for the property, usually within 30 days of the auction date.

Auction Companies

When an auction company is conducting an auction, the procedure is different. In this case, an auction is generally held on the site of the property. Bidders must register in advance of these auctions to be eligible to bid and should arrive before the auction begins in order to do so. At the time of registration, the company tells bidders the terms of the auction, including accepted payment methods and how soon payment will be expected. These auctions occur with the bidders seated. Each bidder raises a numbered paddle to indicate that he is willing to meet the bid price the auctioneer is asking. The bidding ends when no one else is willing to raise the price. When an auction company conducts an auction, there's usually a commission, called a buyer's premium, added to the winning bid price.