What is a "foreclosure auction"?

A foreclosure auction is a public auction specifically designed to sell properties that have undergone the foreclosure process. When a homeowner defaults on their mortgage payments, the lender has the right to repossess the property. This leads the lender to sell the property at a public auction to recover the outstanding debt. During the auction, interested buyers have the opportunity to bid on the property, with the highest bidder ultimately winning the right to purchase it. This process is typically facilitated in a public setting to ensure transparency and fairness.

The auction format allows for competitive bidding, which can often result in the property being sold for market value, or potentially below market value, depending on the level of interest in the property. Foreclosure auctions are distinct from other property sales, such as private sales or real estate seminars, as they are driven by the legal proceedings of foreclosure and aim to efficiently dispose of distressed properties.