How House Auctions Work: Guide, Risks, Value, & Truth

Everyone who surfed a lot on Zillow for example, has fallen over them – the houses that are sold at an house auction.

But what does it mean to buy a house at a property auction and what is important to think about? Here are my top tips and advice!

So, how does a house auction work?

A house auction is a fast-paced, public sale. The property is sold to the buyer with the highest bid after the seller’s reserve price is reached. Auctions bids are open so you know what everyone else is bidding. If you have not been to an auction before, it’s a good idea to attend one as a spectator so you can see how they work.

Risks of buying a house at an auction

Of course, most people on site hope to make a cut. If there are many who bid on the same object, however, the price can easily stand out above the market value.

Just like in a normal bidding battle, it is important that you have clear in advance what you think the house is worth and that you stick to it during bidding.

Checklist risks:

  • There may be errors that cannot be seen with the naked eye
  • The previous owner can appeal the purchase (only when the Enforcement Officer sells)
  • The previous owner refuses to move out
  • The previous owner leaves scrap and other things in the home and on the plot
  • You can not cancel the purchase if you have completed the payment

1. You can never be too careful when it comes to buying a house at an auction

Since the purchase cannot be canceled when you have completed the payment, regardless of whether there are hidden errors or not, it is extremely important that you fulfill your duty to investigate.

It can be a good idea to bring an inspector during the tour to get as good an overview as possible, but you should also examine the house in the smallest detail.

  • Note all defects and analyze what they may cost to remedy. Weigh this into your final bid so that you do not stand there then and can not afford to repair the errors.

2. Ask a lot of questions when buying a house at an auction

You need to make sure that you are really safe. Ask many questions to the broker or other person in charge, even if they feel banal.

Feel free to call and double check with electricity companies, water companies and so on. Is the stove really approved for heating?

Is the electricity consumption the one that actually stands.

Sometimes it also happens that the house is sold below its market value.

In the best case, the new owner can then consider himself happy to have won the bidding at a good price and hopefully the house does not turn out to contain any unexpected errors.

3. The possibility of a bid not being accepted at an house auction

But there is another risk to watch out for.

Namely, the possibility that the final bid will not be accepted. On the one hand, it may be that the Enforcement Agency itself considers that the bid is too low.

Then a new auction will be held where the hope is that more stakeholders will show up and roll up the price towards the market value.

On the one hand, the homeowner himself can appeal the offer to the district court.

How does bidding work?

After the property has been announced, the bidding takes place with oral bids.

When bidding ends, the auctioneer clubs the highest bid. The auctioneer then makes an assessment of whether the bid can be accepted.

In order for the offer to be accepted, it is required that the protection amount has been reached. It must also not be probable that a significantly higher price can be achieved.

If the bid is not accepted, we make a new attempt to sell if the creditor requests it within a week of the auction.

The property can also in some cases be called out directly at the same time of sale.

When can you inspect the property?

The property is only shown on one occasion before the auction day. The ad says when the winch takes place.

Properties are usually sold in existing condition. This means that you buy the property in the condition it is in at the time of the sale.

As a buyer, you therefore have a far-reaching duty to investigate. You can not normally expect to receive compensation afterwards for any errors.

It is therefore important that you obtain accurate information about the property you are interested in before the auction.

How does a viewing work?

The screening is led by employees. It is important that you wait until they are in place and start viewing.

For privacy reasons, they usually do not publish interior photos of properties. For the same reason, you are not allowed to photograph interiors during the screening.

Sometimes exceptions can be made, for example in the event of damage to the property or if it is unoccupied when we show it.

Can a viewing be cancelled?

A viewing and auction can be canceled at short notice, for example if the debts on which the sale is based are paid or if the court needs time to decide an appeal.

The enforcement service inform about canceled auctions in each advertisement on the auction square.

How does a valuation work?

The enforcment services describe and value the property before a sale. They usually hire an independent and expert valuer who has the task of finding out:

  • the condition of the property,
  • accessories and
  • other that is important in the context.

It is good, but not necessary, that the valuer has contact with the property owner. The description and valuation that is made is not to be equated with a property inspection.

The sale includes what by law is an accessory to the property.

If there is property that appears as an accessory but is not included in the sale, this must be stated at the time of the auction.

This is how sales through brokers work

If you are considering buying a house that is under foreclosure but where sales go through brokers, it is a bit like buying any house.

The risks are the same as those you face at an executive auction, but with the difference that the seller can not appeal.


Why is a house sold through an auction?

When a house is sold at an executive auction, it is because a person has ended up in financial distress and the Enforcement Officer has made a foreclosure on the house.

At an executive auction, it is the Enforcement Officer who acts as a broker.

Sometimes it happens that the seller prefers a broker who takes care of the sale, then it is no longer called an executive auction, but the house is still under foreclosure.

Also, check out this video on where you can buy auctioned houses online and what you can expect when doing this:



This article has been reviewed by our editorial board and has been approved for publication in accordance with our editorial policies.

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