A Foreclosure Goes to Auction, Now What?

Richard Montgomery on Jul 21, 2026

Q: A real estate agent recently showed us a foreclosure home. Our offer was not accepted. Three weeks later, the house is now in auction. Can we/should we still work with the agent when this happens? Or are we on our own?

A: First, the good news: Yes, your agent can still help you. Whether they should depends on one critical document -- your buyer representation agreement.

The Agreement That Changed Everything

Following a nationwide legal settlement that took effect in August 2024, agents are now required to have a signed buyer representation agreement before showing any property. This agreement spells out their role, their pay and when they are paid. If your agent showed you this foreclosure and you signed such an agreement, review it carefully. It likely covers your continued relationship through this auction.

If no agreement was signed, it is a compliance failure on the agent's part and your situation is murkier. Have an honest conversation about what they can do going forward and how they expect to be compensated. By law, commissions are not allowed on foreclosure sales on most auction platforms. Online auction platforms carry more risk than local government auctions and are not recommended.

You Have an Edge Most Bidders Do Not

Before you decide whether to bid, recognize one advantage: you have already been inside this home. Most experienced investors who compete at foreclosure auctions are shrewd, well-capitalized and may never have seen the interior. They are bidding on comparable sales, neighborhood data and a drive-by. You are bidding with actual knowledge of the condition. That advantage is real, and an agent experienced in auctions can help you use it. Your willingness to live there may justify outbidding an investor.

What Auction Bidding Actually Looks Like

Foreclosure auctions operate very differently from a traditional purchase transaction. There is no financing contingency, no inspection period and no attorney approval cooling-off window. The buyer assumes all of the risk. Properties are sold as is. You arrive with cash or a cashier's check and winning the bid is binding.

Conduct thorough due diligence, including title searches and property inspections, before bidding. Your agent can assist with research before the auction date, but at the auction itself, the bidding is between you and the auctioneer -- not your agent.

The Professional You Actually Need

Here is the part many agents will not tell you: For a foreclosure auction, a real estate attorney is not optional. They can review the title history, identify liens that will survive the sale, explain redemption rights in your state and protect you from liabilities surfacing months after closing. Mediation is worth understanding -- disputes over auction outcomes or title defects can often be resolved before costly litigation becomes necessary. The law firm Relin, Goldstein & Crane in New York has a useful overview of the auction process titled "Buying a Property at a Foreclosure Auction: A Quarterly Newsletter for Real Estate Professionals" on their website.

Your agent's knowledge of the property is valuable background. Your attorney's review of the title is the protection you cannot skip.

My Recommendation

Work with your agent for market context and pre-auction research. Hire a real estate attorney before you bid a single dollar. Both resources, working in the roles they are qualified to fill, give you the best chance of a good outcome. Going it alone at a foreclosure auction catches many buyers off guard -- and it is an expensive lesson.

Richard Montgomery is a syndicated columnist, published author, retired real estate executive, serial entrepreneur and the founder of DearMonty.com and PropBox, Inc. He provides consumers with options to real estate issues. Follow him on Twitter (X) @montgomRM or DearMonty.com.

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