The Foreclosure Auction

The Foreclosure Auction. Where it's held and how it's conducted.

Explanation of Foreclosure Sale at Auction

The foreclosure auction is basically the same with both a judicial and non-judicial foreclosure. The primary difference is that with a non-judicial foreclosure a court judgment is required in order to have the auction, and a sheriff isn't needed to conduct it. With a judicial foreclosure, after the lender prevails in court, the judge prepares an order for a foreclosure sale. The lender then takes the judgment to the sheriff to execute (levy) on the property. The sheriff holds a sale of the property and awards it to the highest bidder.

With a non-judicial sale, on the advertised date and time, the lender conducts the auction, sometimes using the services of a professional auction company. It is conducted just like any other auction, with an auctioneer asking for bids. The bank or lender may be the only party there.

Often, the auction is held on the courthouse steps although the location can vary depending on the state and the county. In many states the homeowner is not allowed to bid at the auction. The right of reinstatement and right of redemption can be exercised (in those states that allow those rights) if the homeowner desires, and has the financial capability, to keep the house.

The lender places a minimum bid for the value of the debt that it is owed.

All the bidders except the foreclosing lender must have cash or cashier's checks.

The trustee's deed is executed and given to the highest bidder. Because the lender opened the bidding with a minimum bid equal to the amount owed, any other bid will pay the lender off in full.

If your house sells for more than all the loans and in an amount sufficient to cover any liens, the balance is paid to you.

Private investors often place bids at an auction, looking for an opportunity to purchase a house for below market value. These same investors may approach you prior to foreclosure and ask to buy your property during the pre-foreclosure reinstatement period.

Private investors would rather buy from you prior to foreclosure sale because at an auction there is competition from other bidders, cash or cash equivalents is required, and the bidders do not have an opportunity to inspect the property’s interior prior to making the purchase.