How to Finance a Property at Auction

Auction bidders must have financing in place by the day of the event.

Auction bidders must have financing in place by the day of the event.

Buying property at an auction offers the possibility of finding a real deal, but it also means you'll need to have your financing in place before the gavel goes down at the end of the bidding. You'll also have to do your own legwork and research the background of the property to make sure you're not buying a former toxic waste dump or a tear-down that will make your lender laugh when evaluating your loan application for the auction win.

Read the auction listing and any required state and federal real estate disclosure documents for the property. Disclosure reports include lead paint and any damage to building or systems for structures, and the source and quality of the water and the availability of a sewer system on the property up for auction.

Order and pay for a preliminary title report for the property and visit the county or city tax and assessor offices to research the records for your potential property. A title report traces the legal ownership trail of a property.

Inspect the property during the designated days or make an appointment for the examination. Pay a home inspector, electrician, plumber, contractor and surveyor to identify potential problems with the structure or land and locate any damage to the systems, including the heating, cooling, electric and plumbing.

Hire an appraiser to evaluate the worth of the property. Save the report to submit to your escrow officer if you are the winning bidder at the property auction.

Register with the auction as a potential bidder and obtain the specific terms for the auction event.

Deposit cash, if required by the auction company, to allow you to bid at the auction.

Shop lenders and select the best loan for your needs, unless you plan to pay cash for the property.

Complete the loan application, pay any application fees and submit personal financial documents and paperwork on the property to qualify for a loan for the property.

Obtain from your lender a letter of prequalification listing the amount of your qualification and give it to the auction company.

Make the winning bid on the property at the auction.

Submit the auction paperwork and title report on the property to your lender for your loan and pay the necessary fees to start the loan process.

Open escrow on the property by submitting the auction paperwork, title report and loan documents, and pay the required fees due to the escrow company.


  • Many county sheriffs' and assessors' offices post foreclosure property auctions on websites or hire professional auction houses to conduct the bidding for the homes taken for failure to meet state tax obligations.


  • Many times auction property is sold "as is." This means the buyer assumes all responsibility for meeting any repairs required by the county or city. It also means you must pay for any prior liens still on the property. The title report lists construction and mortgage liens. Title insurance will protect your interests if you pay for a report on the property before winning the bid.
  • Your lender may request a second independent property appraisal.

About the Author

Lee Grayson has worked as a freelance writer since 2000. Her articles have appeared in publications for Oxford and Harvard University presses and research publishers, including Facts On File and ABC-CLIO. Grayson holds certificates from the University of California campuses at Irvine and San Diego.

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