Online Foreclosure Auctions: How Do They Work?

Most foreclosed homes are sold at public foreclosure auctions held by courts and sheriff's departments. Traditionally, this is the preferred and most popular method for buying and selling foreclosures on the open market. The Internet, however, has made it possible for real estate to be bought and sold online as well, and many investors have turned to that medium for their real estate transactions.

Online foreclosure auctions provide enhanced access for many real estate investors who do not have to travel to specific locations and place bids the traditional way along with other investors and prospective homebuyers. The idea is to use the Internet to reach a broad audience in a timely manner and provide exposure for the properties and for the buyers.

Several online foreclosure auction websites have popped up, offering online access to a slate of properties up for bid, just like a traditional foreclosure auction. And the process pretty much works the same way for both venues. A property is placed up for auction and an asking price is listed. Users – who have registered with the website – place bids on the property, and the winning bid is selected. Documents for title and ownership are then delivered electronically to the winner.

Also, the timeframe for this type of auction process is shorter than it is in the traditional, 'real-world' method. The preview and bidding processes together take an estimated 3-4 weeks, which is preferable for many to the several weeks and/or months it could take for a traditional foreclosure auction.

Each online auction website has its own regulations and guidelines, so to learn more, consult with a specific website and view their terms and conditions before you begin bidding.