The short answer
Online foreclosure auctions are bidding events on platforms such as Auction.com, Xome and Hubzu. Most homes there are bank-owned (REO) or headed to a foreclosure sale. Buyers register, bid online, pay a buyer's premium on many events, and sign the seller's contract with no inspection or loan contingency. The seller may have a reserve. Every event has its own terms. Read them before you bid.
The public trustee sale is a different thing. For that, see buying a foreclosure at auction. This page is about the online REO platforms.
Online REO auctions vs public trustee sales
| Online REO auction | Public trustee sale (Colorado) | |
|---|---|---|
| Seller | Lender, servicer or investor that owns the home | The public trustee, for the lender |
| Where | Platform website | County public trustee, in person or the county's own online system |
| Fees | Buyer's premium on many events | Trustee and recording costs; no platform premium |
| Reserve | Often; the seller can decline the high bid | Lender sets an opening bid |
| Payment | Deposit fast, close by a set deadline | Certified funds on the county's schedule |
| Financing | Allowed on some events, cash only on others | Cash or certified funds |
| Contract | Seller's purchase agreement, as-is | Certificate of purchase, then a deed |
| Inspection | Usually exterior only; no contingency | Usually none |
| Title | Deed type and title terms set by the event | Buyer researches title risk |
| Occupancy | Some homes are occupied | Often occupied |
Some Colorado public trustees now run their sales online. That's still a trustee sale under trustee rules, not an REO platform. Check which one you're looking at.
Step by step: online foreclosure auctions
Here's how I walk a buyer through one.
- Read the event terms first. Each listing links to its terms: premium, deposit, closing deadline, deed type, financing rules, and what happens if the buyer fails to close. As of October 2026, each platform posts its own terms; check the current version on the listing.
- Register the buyer, and register yourself. Buyers sign up with ID and often a card or proof of funds. Many platforms have a separate agent or broker registration so your role is on record. Do it before the bid.
- Check the status. Is it bank-owned, or a foreclosure sale that could be postponed or canceled? Pre-sale events can disappear if the owner cures.
- Set the financing plan. Some events allow financed bids with a pre-qualification from the buyer's lender. Others are cash only. If financing is allowed, confirm the lender can close by the event's deadline and on an as-is home.
- Do the outside homework. Drive by. Pull public records and HOA info. Order a title report if the terms allow you to. Price repairs from what you can see, then add a cushion.
- Build the all-in number. Bid plus buyer's premium plus closing costs plus repairs plus holding costs. Set a hard maximum. See the illustration below.
- Bid, or make a pre-auction offer if the event allows it. Bids are binding. Don't let a buyer bid "to see what happens."
- Wait for seller acceptance. With a reserve, the high bid may go to the seller for review. It can be accepted, countered or declined.
- Sign and fund fast. Deposit and contract deadlines are short. Miss one and the buyer can lose the deposit.
- Close and take possession legally. If the home is occupied, possession follows Colorado's legal process. Bona fide tenants generally get at least 90 days' notice under the federal Protecting Tenants at Foreclosure Act.
The all-in number (illustration only)
| Item | Amount |
|---|---|
| Winning bid | $300,000 |
| Buyer's premium (assume 5%) | $15,000 |
| Buyer closing costs (assume) | $4,000 |
| Repairs you can see, plus cushion | $35,000 |
| Holding costs for 4 months (assume) | $8,000 |
| All-in cost | $362,000 |
If similar fixed-up homes sell for about $375,000, there's not much room left for surprises.
Illustration only. Premiums, fees and terms vary by platform and by event. Read the event terms. Costs are assumptions, not quotes. This is not an offer of credit; a lender sets any loan terms. Program rules change; check the listing.
The buyer agent's role, and getting paid
You can help a lot. Pull comps, estimate repairs, read the terms, check title, and stop a buyer from bidding past their number. Compensation is the question to settle first.
- Some events offer buyer-broker compensation if the agent is registered with the buyer before the bid. Some offer none. The listing and terms say.
- Have a written buyer agreement that says how you're paid if the event pays nothing.
- Ask your managing broker how your brokerage handles platform agreements.
- Public trustee sales usually offer no compensation at all.
How to explain it to your client
"Online auctions can work, but they play by the seller's rules. You'll likely pay a buyer's premium in addition to your bid. You probably can't get inside, and there's no inspection or loan contingency. If you win and don't close on time, you can lose your deposit. The seller may also turn down the high bid. So we'll read the event terms together, figure out your all-in number, and you won't go a dollar past it."
Watch-outs
- Premiums add up. Budget the premium as part of the price.
- "Subject to seller approval." A high bid isn't a sale until the seller accepts.
- No contingencies. The deposit is at risk if the buyer can't close.
- Deed type. Some events give a special warranty deed, some less. Ask a title company what it will insure.
- Occupied homes. Don't approach or enter. Follow the legal process after closing.
- Wire fraud. Confirm wiring instructions by phone with a known number, never from an email alone.
- Not legal advice. Send contract and possession questions to an attorney.
Sources
- Colorado General Assembly: Colorado Revised Statutes, Title 38, Article 38
- NLIHC: Protecting Tenants at Foreclosure Act made permanent
- Colorado Division of Real Estate
Further reading
- Buying homes at auction in Colorado on kennarealestate.com
- Foreclosures in Colorado on kennarealestate.com
- Denver HUD vs foreclosure vs auction on denver-hudhomes.com
Keep going
- Buying a foreclosure at auction
- How foreclosure works in Colorado
- Buying a bank-owned home: the buyer side
- Working with real estate investor clients
Want the whole system? The BPO & REO Kit gives you the asset-manager outreach playbook, six email templates, the BPO checklist, photo shot list, comps worksheet, REO listing checklist and a tracking sheet.
This is training for real estate agents. It isn't legal, tax, lending or appraisal advice. Program rules change; check the official source. Check with your managing broker. Owners facing foreclosure should talk to an attorney and a HUD-approved housing counselor.
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How do online foreclosure auctions work?
Buyers register on the platform, bid online on bank-owned or pre-foreclosure homes, and sign the seller's as-is contract if they win and the seller accepts. Each event has its own terms.
What is a buyer's premium?
A fee added to the winning bid on many online auctions. The amount is in the event terms.
Can you finance an Auction.com or Xome home?
Some events allow financed bids with a lender pre-qualification. Others are cash only. Check the listing.
Can a realtor help with an online auction?
Yes. Register as the buyer's agent before the bid. Some events pay buyer-broker compensation and some don't, so have a written buyer agreement.
Is an online auction the same as a public trustee sale?
No. A trustee sale is the foreclosure sale itself. Online REO auctions are usually homes the lender already owns.
Brian Lee Burke is the founder of PadLeaders, a Colorado real estate broker licensed since 2003, team leader of The Kenna Group at Keller Williams DTC (formerly Kenna Real Estate Group) and the author of Mastering Real Estate and The Real Estate Playbook. More about Brian.
- Agent training by Brian Lee Burke, The Kenna Group at Keller Williams DTC
- Colorado Division of Real Estate (https://dre.colorado.gov)
- Protecting Tenants at Foreclosure Act
- Colorado General Assembly: Colorado Revised Statutes, Title 38, Article 38
- Colorado Division of Real Estate
- Buying homes at auction in Colorado on kennarealestate.com
- Foreclosures in Colorado on kennarealestate.com
- Denver HUD vs foreclosure vs auction on denver-hudhomes.com