Jump to:Purchasing a home through a foreclosure auction presents a unique opportunity to secure property ownership quickly and often at a significant discount. However, stepping into the world of foreclosure auctions requires careful preparation and a clear understanding of the process to avoid costly mistakes. Before you raise your bidder paddle, it’s essential to understand how they work. Unlike a traditional home sale, foreclosure auctions come with risks, including limited property access, no guarantees, and potential financial obligations beyond the bid price. Nonetheless, equipped with the right knowledge and due diligence, you can navigate these challenges and make confident bidding decisions. Attending a foreclosure auction is an exciting yet complex process that demands preparation and a strategic approach. We asked an expert for everything you need to know to understand the risks, prepare effectively, and make the most out of this unique home-buying opportunity. Related StoriesWhat Is a Foreclosure Auction?"A foreclosure auction happens when a homeowner is in default on the terms of their mortgage or deed of trust, typically because they haven't made the required payments," says Sebastian Frey, a broker associate at Compass. It doesn't happen right after one missed payment—there's a long process before a home reaches a foreclosure auction, with each state mandating the specific notice periods.After a home is foreclosed, the mortgage lender might put it up for auction to attempt to recoup as much of its losses as possible. These auctions are held both in-person, often at courthouses, and online.Related StoryCan Anyone Go to a Foreclosure Auction?Yes, both in-person and online foreclosure auctions are open to the public, but you may need to register in advance to attend. Plus, individual foreclosure auctions may have their own requirements for attendance and bidding, so be sure to check with the organizer before showing up.What Is the Best Site for Foreclosure Listings?"Foreclosure auction notices are posted in the 'public notice' section of the newspaper of record in whatever county or town the property is located in," says Frey. "They are sometimes posted online, for example, at Auction.com or Zillow, but there is no requirement that they be posted there." You might want to reach out to a real estate agent who specializes in foreclosures, as they may have the most up-to-date information about upcoming auctions.Related StoryHow Does a Foreclosure Auction Work?Foreclosure auctions work just like a typical auction, where there's an opening bid, and interested parties can place higher bids. "At the auction, there will always be at least one bidder and the bank or mortgage servicing company who sets the opening bid at auction and can increase their bid if there are other potential buyers at the auction," says Frey.The winner is the highest bidder. "If the bank or servicing company is the highest bidder, they 'take back' the title to the property, and it becomes a real estate–owned [REO] asset for them," Frey adds. He also notes that "foreclosure auctions are often postponed at the last minute—perhaps 90 percent of the time." So, you might have to be very patient and flexible if you plan on attending.Related StoryAre There Any Risks in Buying a Home From a Foreclosure Auction?As with all investments, there is risk involved with bidding at a foreclosure auction—and there is substantially higher risk here than buying a home in a traditional manner. "There will be no inspection reports available, no title insurance," says Frey. "There may be liens on the property which survive the foreclosure. If there are tenants in the property, the winning bidder will have to evict them."Frey recommends you do your homework in advance of a foreclosure auction. "See if the property is occupied, and if so, who is living there, like the former owner or a tenant. Try to get inside the property, if possible, to assess the condition," Frey says. "Check public records to see if there are any red tags or building code violations. See if the property tax is current. And of course, have a realistic idea of as-is fair market value."If you're new to bidding on a home at a foreclosure auction, it's best to work with a real estate attorney and/or a real estate agent with foreclosure experience to help guide you along the way and mitigate some risk.Follow House Beautiful on Instagram and TikTok.Expert consulted:Sebastian FreyReal Estate BrokerSebastian Frey is a licensed real estate broker in the Silicon Valley area. He obtained his real estate broker’s license in 2005 and has since earned prestigious designations such as CIPS, GRI, and CRS. With over two decades of experience and 430 homes sold, Seb brings exceptional expertise and a client-centric focus to every transaction.