Buying a Foreclosure at a Home Auction? Here’s How Much You’ll Probably Spend

If you’re buying a house with cash, it makes sense to try to get as good a deal as you can — and that’s where auctions come in. But is it true that you’ll pay much less if you buy a foreclosed house at auction? And if so, how much of a discount can you expect? How much do foreclosed homes sell for at an auction?

You very likely can shave some cost off the final price when you buy a home at auction, but just how much that home will cost — or what level of discount you can score — will depend on a number of factors. You definitely don’t want to overpay, especially considering you might need to pour a lot of money into repairs and other problems once the home is yours.

To help you calculate how much a foreclosed home might sell for at auction, we talked to expert real estate agents with years of experience in the field of foreclosures.

How much do foreclosed homes sell for at auction?

Appraised value

One important factor in how much a house will go for at a foreclosure auction is its appraised value — the professional estimate of its worth in the current market.

The lender that’s trying to collect on the defaulted mortgage will order an appraisal on the home to determine its worth. They’ll then use that value as a starting point when conducting the auction.

An appraisal typically takes into account a home’s size, condition, features, and property. An appraiser will compare the home to others around it, taking into account recent sales prices for other homes with similar features. These comparable homes — comps — can give you a good idea of what similar homes in the area might be worth. (But, as we’ll discuss below, the home’s current condition might set it apart from other comparable homes in the area, dragging its value down until it’s been renovated or repaired.)

Also remember that, although you may be hoping for a discount, the bank is trying to recoup as much of the appraised value as possible. Therefore, your offer will need to take that into consideration if you’re bidding to win.

Michael Constantine, a top agent in the Pasco County, Florida, area, has extensive experience with foreclosures as a real estate agent and has also worked for major financial institutions. He gives a little insight into the bank’s perspective in these situations:

Knowing the ins and outs of the market you’re hoping to buy in will help you estimate a potential auction price. Using the Homelight Home Value Estimator can help. You’ll get even more insight with an experienced real estate agent, who can be an asset in understanding home sales, pricing, and appraisals of the specific home or homes you’re evaluating.