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Investing & distressed property

Foreclosure Auction Bid Calculator

Auction buyers usually pay cash, can't inspect inside and take the property as-is, sometimes with liens that survive the sale. Decide your maximum bid before the auction starts: this calculator works back from the after repair value through every cost and your required profit, and shows how much cushion there is against the opening bid.

Value & repairs
250,000
$
120,000
$
From the auction listing or trustee
40,000
$
You usually can't see inside: estimate high
= 16% of the home price
15
%
What you inherit
0
$
Senior liens, some HOA or municipal liens
3,500
$
3,000
$
1,500
$
Exit
5
mo
1,100
$
8
%
= $20,000
15
%
Percent of ARV
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Your maximum bid
$133,000
53% of the after repair value
You have $13,000 of room above the opening bid. Stop bidding at $133,000.
Profit if you win at the opening bid
$50,500
Profit if you win at your max bid
$37,500

From ARV to your maximum bid

After repair value
$250,000
Repairs
−$40,000
Repair contingency
−$6,000
Back property taxes
−$3,500
Eviction or cash for keys
−$3,000
Holding costs
−$5,500
Selling costs
−$20,000
Auction & recording fees
−$1,500
Your target profit
−$37,500
Maximum bid
$133,000

The dark line marks the opening bid ($120,000).

How the maximum bid is calculated

The formula

Maximum bid
Maximum bid = ARV − Repairs − Contingency − Surviving liens − Back taxes − Possession costs − Holding − Selling costs − Auction fees − Target profit
ARV
After repair value: the expected resale price once repaired
Surviving liens
Liens that stay attached to the property after the sale
Possession costs
Eviction or cash-for-keys costs if the home is occupied
Auction fees
Auction, recording and similar fees due on the purchase
Repair contingency
Contingency = Repairs × Contingency %
Contingency %
Extra allowance for repairs you couldn't inspect
Holding costs
Holding = Monthly holding cost × Months held
Monthly holding cost
Taxes, insurance, utilities and loan costs each month
Months held
Months from the auction to the resale
Selling costs
Selling costs = ARV × Selling cost %
Selling cost %
Commission, transfer taxes and fees on the resale
Target profit
Target profit = ARV × Target profit %
Target profit %
The profit you require, as a share of the ARV
Cushion
Cushion = Maximum bid − Opening bid
Opening bid
The starting bid announced for the sale, often set by the foreclosing lender

The maximum bid works backward from what the property should sell for once it's repaired. Every cost of getting from the auction to a resale comes off the after repair value (ARV), and so does the profit you need to make the risk worthwhile. What's left is the most you can pay and still hit your target.

  • The repair contingency covers what you couldn't see: auction buyers often can't get inside before the sale.
  • Surviving liens and back taxes are debts you take on with the property. Whether a lien survives depends on its priority and your state's law, so confirm with a title search before you bid.
  • Possession costs cover an eviction or a cash-for-keys agreement if the property is occupied.

The cushion compares your maximum bid with the opening bid. Auction terms, deposit rules and fees are set by the state, county or trustee, so check them for each sale.

Results are estimates for planning, not a loan offer or financial advice. Lenders, title companies and local rules set the actual figures.

Terms used in this calculator

Foreclosure AuctionForeclosure processA foreclosure auction is the public sale of a property after a borrower defaults, where the highest bidder buys it, usually with cash and as-is. If no one outbids the lender, it becomes bank-owned.Opening BidForeclosure processAn opening bid is the first bid at a foreclosure auction, usually placed by the lender. Other bidders must exceed it to buy the property; otherwise the lender takes it back.Credit BidForeclosure processA credit bid is a bid at a foreclosure auction that the lender places using the debt it is owed instead of cash. The lender can bid up to the amount of its debt without paying any money.LienTitle & legalA lien is a legal claim against a property that secures a debt. It must usually be paid off before the property can be sold with clear title, and the creditor can force a sale in some cases.After Repair Value (ARV)InvestingAfter repair value (ARV) is the estimated market value of a property once planned repairs and renovations are complete. Investors use it to decide how much to pay for a fixer-upper.Cash for KeysForeclosure processCash for keys is a payment a lender or new owner offers to occupants of a foreclosed property in exchange for moving out by a set date and leaving the home in agreed condition, avoiding eviction.Title SearchTitle & legalA title search is a review of public records to confirm who legally owns a property and to find any liens, judgments, easements or other claims that could affect ownership.Right of RedemptionForeclosure processA right of redemption lets a foreclosed homeowner reclaim the property by paying the full amount owed, either before the foreclosure sale or, in some states, for a set period after it.
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Frequently Asked Questions

Guides to read next

Auction Day Bidding Strategy for Foreclosure SalesGuide · 6 min readAuction day is where your research turns into a binding purchase, so preparation and discipline matter more than tactics. This guide covers what to do the night before, how bidding works in person and online, how to stick to your maximum and what to do right after you win or lose.Researching a Foreclosure Property Before the AuctionGuide · 6 min readAt a foreclosure auction you usually buy as-is, unseen and without contingencies, so research done before the sale is your only protection. This guide covers how to confirm the sale details, check title and liens, estimate value and repairs from the outside and turn it all into a maximum bid.Title, Liens and Due Diligence on Distressed PropertiesGuide · 9 min readDistressed properties often come with debts and paperwork problems attached. A title search, a clear understanding of which liens survive a sale and the right title insurance protect you from inheriting someone else's obligations. This guide explains what to check and when.

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Disclaimer: The information on this page is for general educational purposes only and is not legal, financial, tax or investment advice. Laws, lending rules and market conditions vary by state and change over time, and any figures shown are estimates. Before you buy, sell, finance or bid on a property, consult a qualified attorney, financial advisor, lender or licensed real estate professional about your situation.