Buying a Foreclosure at Auction: What to Look For

a real estate auction sign

If you are a first-time homebuyer or novice investor, buying a foreclosure at your local county auction or online is generally a bad idea. Real estate auctions are growing in popularity, but this is where experienced investors come to play. When you don’t know what you are doing, you can easily find yourself on the losing end of a deal.

Keep reading to learn more about buying a foreclosure at auction, what the pros and cons are, and what other options are available to new investors.

What are the Types of Property Auctions?

a person raising a hand at a property auction

There are three basic types of property auctions: 

1. Absolute Auctions

In an absolute auction, a property is sold to the highest bidder, regardless of the price. Absolute auctions do not have a reserve price or a required bid amount for the item to be sold.

2. Reserve Auctions

In a reserve auction, the final bid can be rejected by the seller if the reserve price isn’t met. When buying a foreclosure at auction, a reserve is commonly used. This is because lenders try to recoup most, if not all, of their losses from the sale of the foreclosed home. 

3. Minimum Bid Auction

In this type of auction, the minimum bid is disclosed to the bidders. For you to participate in the auction, you must start bidding at the set price. Sellers often prefer this type of auction because it reduces the risk of losing money. 

What Types of Properties are Sold at Auction?

a group of people holding up auction numbers

Any property type or asset can be sold at auction, but the most common properties sold at auction are foreclosures. Of course, this varies depending on your market and auction. Typically, the types of real estate properties sold at auctions include single-family homes, commercial properties, real estate notes, multi-family homes, and plots of land.

Pros & Cons of Buying a Property at Auction

a row of houses in philadelphia

Just like any other real estate investment, you need to know what you’re getting into before buying a foreclosure property at auction. Keep reading to learn the pros and cons of buying a forclosure at auction.

Pros of Buying a Foreclosure Property at Auction

The pros of buying a foreclosure at auction include:

Cons of Buying a Foreclosure Property at Auction

Comparitively, the cons of buying a forclosure at auction include:


Buying a house at auction as a new investor or first-time home buyer isn’t usually the best option. To minimize risks, it’s usually best to build your investor network or develop real estate experience (via house hacking or other methods) before buying a foreclosure property at auction.

If you’re thinking about buying a property or investing in real estate for commercial reasons, Brotherly Love Real Estate are your local property experts in Philadelphia and San Diego. Contact us online today or give our team a call at (215) 769-9875 to discuss which properties you’re interested in. We can support you to buy a property with less risk and more information than at a property auction.