How I Bought a House at a Foreclosure Auction

Buying a house at a foreclosure auction isn't as scary or tricky as you might think. Here's how one investor did it successfully, step-by-step!

How i bought a house at a foreclosure auctionNote from Paula: This is a guest post from my friend Jason Hull, a financial planner, landlord, entrepreneur, world traveler and West Point grad.

In this post, Jason describes how he bought a rental property through a foreclosure-auction website.

By the way: Jason built and sold a 7-figure business after two tours of service in Bosnia. He’s got sharp insights about business, finance and life.

Without further ado … take it away, Jason!

How i bought a house at a foreclosure auction - you are the high bidder

How I Bought a House at a Foreclosure Auction

I’ve been known to buy a thing or two at auctions.

When I was in graduate school, I used to buy random pieces of computer and scientific equipment from my schools’ surplus auctions. I’d resell these on eBay, sometimes for handsome profits. (Thanks, Rhodes College, for buying the rodent breather!)

I was a small player in those auctions. There were people who conducted tens of thousands of dollars worth of transactions during those monthly auctions. It was clear that they were doing the same thing I was, just on a grander scale.

My transactions weren’t enough to pay for my grad school education, but it certainly covered beer money during those years. I never lost money (though I make no promises that it can’t happen to you) when I purchased items at auction, even if a few items remained unsold.

There were three simple reasons why I successfully created a surplus auction side gig:

  • Knowing the Prices — I researched the prices of comparable, recently-sold items on eBay, so I knew the current fair market rate. I also researched how much each item recently sold for at my school’s last auction, so I knew my ‘wholesale’ cost. I could quickly figure out whether or not I could an item would be profitable.
  • Valuing my time — I goosed up the shipping charges to pay for the time I spent packing and shipping the item. (I wasn’t compensated, though, for my wife’s complaints about a stockpile of inventory cluttering up the extra bedroom!)
  • Market Inefficiency. — At most, 50 people attended my university’s surplus auctions, and only about 20 of them were serious buyers. I rarely got into a bidding war. On eBay, though, there are thousands of buyers. Since demand is higher, basic economics states that prices will be higher.

Encouraged by the success of my eBay side hustle, I recently decided to try my hand at a real estate auction. I thought buying tax deeds might be interesting.

But while I was there, I became distracted by a HUGE throng of people attending a concurrent foreclosure auction.

Who are these people? What was happening? I needed to know more.

I sauntered to the edge of the crowd, and saw a live, in-person foreclosure auction run by a company called When I got home, I pulled up their website.’s business model is to sell some properties in-person at foreclosure auctions and other properties solely online. I decided to look for online-only auctions for a few reasons:

  • The in-person auctions are crowded. It’s not that I don’t like people (I do!), but the fewer people competing against me, the better.
  • In-person auctions get more emotional. If you’ve ever been to an auction, wanted something, and then been outbid by that so-and-so over in the corner who — … “was that him SMIRKING at me?!? Why I oughta…” —  then you know it can become personal. Soon you’ve broken your budget because you’re just trying to one-up that son-of-a-$*#$&#% over there in the corner.
  • Fewer people bidding against you. I know this seems like I’m repeating #1, but is one of many ways that people find out about foreclosure auctions at the courthouse steps. Most jurisdictions are required to publish notices in the local paper of pending foreclosure auctions. That means a lot of other people may come to bid on a property that you want.

My wife and I noticed a few properties in our area that would make good rental properties (if the price was right). We tracked the online auctions to see how they proceeded – just as I tracked the results of my university’s surplus auctions during my grad school years.

A couple of the properties sold for surprisingly high prices, but most of them wound up selling in a reasonable investor range.

Great sign. Next step: enter the game.

Game On!

I kept watching until a house came up for sale in a neighborhood that had high rental demand, low supply, and strong rents. I signed up to bid on the property.

To sign up to bid on a property on, you need to complete two steps:

  1. Sign up for an account.
  2. Register to bid on the property.

When you register to bid on the property, you need to provide them with a credit card number. They will put a $2,000 hold on your credit card, in case you’re a winning bidder and then back out of the purchase.

I also went through a mini pre-qualification process over the phone. The representative wanted to confirm that I knew that it was an all-cash auction and that the property was being sold “where is, as is,” with no contingencies. I confirmed, and she approved me.

The representative told me that if I placed the high bid, I’d have two hours to electronically sign the contract and that I’d be required to wire the earnest money deposit on the next business day.

That’s fine with me. Let’s start the bidding!

The bid page itself updates automatically. It’s run in AJAX – computer-speak which means that you don’t have to keep hitting “refresh” on your browser. When you bid, the page automatically updates to show if you’re the high bidder. There are minimum bid increments that decrease as the price rises.

I opened the bidding with an offer for $10,000. Soon, I was outbid.

how i bought a foreclosed home at an auction -- you are outbid

I bid again. My competitor volleyed. We went back and forth a few times.

I then had a (hopefully) brilliant idea. I noticed that my competitors were slow to react. It took between 1-24 hours before they would outbid me. They might be using the e-mail system, I realized, rather than watching the page.

I knew that would add a few minutes to the closing time if there was a last-second bid, but I also figured that the other bidder(s) were using e-mail as a notification, and the e-mail wouldn’t go out until after the auction closed if I waited until the last minute to place a bid.

It was time for some careful, calculated maneuvering.

It was the Saturday after the July 4 holiday. My wife and I were on vacation, but I couldn’t relax. I was glued to my computer with sweaty palms, hoping that the Internet connection stayed solid. We were at a bed-and-breakfast in the middle of nowhere, and I wouldn’t be able to find another connection if our Wifi went out.

I entered my bid. I offered a few dollars more than the minimum increment. If someone else tries to put in an equal bid, I reasoned, mine would be higher.

I got the notification that I was the high bid. The website added two LONG minutes to the clock. After two minutes (that felt like two years), I received confirmation that we’d won the auction!  We celebrated our big win with lunch, followed by a trip to a winery. As we were sitting outdoors enjoying a glass, the sales contract arrived in my Inbox.  I I signed it using my iPhone, right there from the winery.

The next step: Pay up!

how i bought a foreclosed home at an auction -- sold

Show Me the Money!

According to the contract, we needed to send in an earnest money deposit of the greater of $2,500 or 5% of the auction price. I called to ask if I could simply wire the entire amount and accelerate the closing. The representative said that would be fine. The following Monday, I initiated a wire transfer of the full amount.

The deal was now in the seller’s hands.

When properties are bought and sold through, the seller has 15 business days to accept the price. The bank that owned this property took all 15 days to approve the sale. The closing company then took another two weeks to complete their end of the paperwork.

Real estate can be a game of “hurry up and wait.” 

We survived those hiccups, and we’re now the owners of another rental property. We snagged a great deal on the property through the foreclosure auction website, and I’d certainly buy a rental from a foreclosure website again.

Jason Hull is the owner of Hull Financial Planning and a contributor to U.S. News and World Report. He’s a West Point graduate who served two tours in Bosnia, and holds a Certificate in Financial Planning from New York University. As of August 2014, he closed on Rental Property #9.


  1. says

    This is definitely on my radar. I love a good auction, and even a bad one: real estate, antiques, storage lockers, government surplus. It’s amazing what you find.

    I’ve attended some in-person foreclosure auctions, to watch how the game is played, as well as watching online auctions on and Bid4Assets. But haven’t jumped in yet.

    I’m glad your auction was a success! I’ve read reports online of people winning the auction but the bank refusing the offer – basically de facto, unstated reserve prices.

    • says

      Hi Jack – Yeah, I love a good auction. I’ve been sucked into them before (search for diamonds on my website and I have a good story there), so totally understand the allure.

      I was pretty sure that the bank was going to accept my bid because a) it was above the stated reserve price, and b) it was only slightly less than the foreclosure amount. I’d have been ticked had I won the auction to have the bank reject the amount; it’d be misleading.

  2. says can have some great deals. Bidders should be aware that many houses sold are occupied and it is the buyers responsibility to vacate the occupants. Many houses are also only sold with a quit claim deed, which does not guarantee clear title.

    • says

      Great point, Mark. Both buying an occupied property and quieting title come with their own challenges. They may be worth the effort depending on the price, but, as you point out, you may not be able to occupy with clear title the day you close.

  3. says

    Jason- thanks for introducing me to I’m curious to learn more. How does closing work when purchasing online? (are forms mailed to you? Do you show up to a local title company?) Can bids be made contingent on home inspections?

    • says

      Hi Jeni –

      The closing was handled by a title company out of Houston. I think they contract to local title companies. I received the documents by e-mail and returned them via FedEx. Their local Realtor left the keys under a rock at the house (a long story; they seemed disorganized).

      Bids are as is where is. There is an open house date where you can inspect the house yourself. I’ve never seen a foreclosure auction – or otherwise – where you could make contingent bids.

  4. says

    Thanks for the insight Jason, I’ll def take the course later on when I am at that level of playing field. Right now I am still paying off debt, but now not with just one source of income, but two others from eBay sales of random finds and a second part time job.

    • says

      Hey Mike –

      Great work on getting the additional income! A lot of people take the “woe is me” pity party approach to their situation, and you’re going the opposite direction. You’re taking ownership and doing something about it. 2 jobs and an eBay side hustle? You’re crushing it! Great work! Keep up with that intensity and that debt will be gone before you know it.

      I bet you a beer that once you get that debt paid off, you’ll never go back.

      • says

        whats happens after numerous attempts and the the reserve is not met through the auction? Some Properties are just not worth the original asking price and comp analysis is way off? will they eventually low the reserve price or revert back to the Realtor?

  5. says

    I don’t know if I could buy without an inspection…how do you know if you are walking into buying a house with 50K worth of damage for you?

    • says

      I’m pretty good at eyeballing properties and knowing how much repair is going to cost. I’m not an inspector (or even handy), but I’ve worked with enough properties now that I can do a once-over and have a good ballpark figure.

      Additionally, there is an open house, so you can go through the property and inspect it at that time. If you miss that window, then it’s caveat emptor.

  6. says


    I am trying to close on an property and was hoping for clarification. Did it take 15 days for to notify you the bank accepted your offer, or did auction inform you it was accepted and then it took 15 days to get signed copy of contract from bank.

    PS – lots of bad PR on the web about – glad yours was a success



  7. says

    Congratulations friend!

    Buying a house online, like buying anything online is very tricky business. What you see may not exactly be what you’ll get. A few of my friends have been ripped off. The good news is that there are auctioning agents that offer reliability and a fall back plan for you.
    Thank you :)

  8. says

    My friend bought two houses (both occupied)…one worked out great(he approached the “tenants”, told them he would not increase their rent, but rent was due, etc, funny he didnt know how much they were renting for, but they paid him without question. They were good tenants.)..the other was such a disaster, that he got a lawyer to reverse the sale….In the second case, the man whom lost the house, took a chain saw to the beams in the home, and the main beam. Poured concrete in the toilets, and down the pipes. The home was totaled.

    • says

      @Norm — Did your friend inspect Home #2 on the morning of closing? Typically, on the morning you close on the sale of a house, you make a personal visit to the property. Walk through it. Make sure it’s in the same shape that you expect. Then you process the closing, and immediately change the locks. This will prevent 99 percent of vandalism (unless the man is criminally breaking-and-entering, in which case, your homeowner’s insurance would cover it.)

  9. says

    Hi Jason,

    I would have thought that would have had plenty of competition since it’s online. Is that site just simply easier because there aren’t as many local-specific options up there, it’s not as well-known yet, or do you think there’s another reason?

  10. says

    If you buy an “owner occupied” house, it clearly states you cannot bother the occupant until after closing. I have heard horror stories on occupants trashing the house out right before or after the house is sold. What do you do in this case? If the home is damaged beyond repair, are there legal ways out of the sale? Also, how long does it take to get an occupant out, and what legal courses do you need to take? There are so many “owner occupied” sales and these definitely scare me off from bidding on them. Any information on handling these type of auctions would be greatly appreciated. You are basically buying these houses “sight-unseen” and buying “as is”. You have no idea what you are buying.

  11. tom chatham says

    I bought my son’s home that went into foreclosure, then into the eauction where I won the bid. Now my title company is saying that because I am related to the original owner, I can be foreclosed on or the second can put a lien on the property…so now I can’t get a loan and am told I still run the risk of being foreclosed on….What am I missing here?

  12. says

    i have a friend that purchase a piece of property for $1000.00 with a zestimate of $37,275.00 on Scott Street in Atlanta how can i find and purchase a fixer upper like that in that money range. i am on a fixed income and looking to purchase a home for myself and my granddaughter

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