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Foreclosure auction max bid calculator
Your maximum bid at a foreclosure auction is the after-repair value, less the costs of repairing, holding and reselling the house, less any liens the sale leaves in place and the cost of getting possession, less your profit. On a $300,000 resale with $40,000 of repairs that comes to $174,200, against the 70% rule’s $170,000. Put your own deal in below.
Your maximum bid
$174,200
Bid up to $174,200 and the deal still pays you $45,000 after every cost below. At $218,800 it pays nothing; above that, you lose money.
The 70% rule says $170,000
70% of $300,000 less $40,000 of repairs. Your own numbers allow $4,200 more. The rule is a screen; bid from your numbers only if you trust them.
How the number is worked out
- After-repair value$300,000
- Selling costs− $24,000
- Repairs− $40,000
- Buffer for what you could not inspect− $6,000
- Holding costs− $9,000
- Your profit− $45,000
- Buying costs on your bid− $1,742
- Your maximum bid$174,200
If your estimates are off
The resale, the repairs and the months are guesses at an auction. Your maximum bid, with each one moved against you and the profit held at the same dollar figure:
- It resells for 5% less$160,500−$13,700
- It resells for 10% less$146,900−$27,300
- Repairs run 25% over$162,800−$11,400
- It takes three months longer$169,800−$4,400
Bidding $146,900 rather than $174,200 keeps the profit whichever of these happens.
The max bid formula
Work back from the resale. Everything the house costs you comes out of it before the bid does:
Max bid = ( ARV
− selling costs
− repairs − buffer on repairs
− holding costs
− liens the sale leaves in place
− cost of getting possession
− your profit )
÷ (1 + buying costs as a share of the bid)The last line is a division, not a subtraction, because recording fees and transfer tax are charged on the price you pay: the more you bid, the more they cost. Dividing finds the bid whose own buying costs still fit.
Worked through with the example the calculator opens on: a $300,000 resale, less $24,000 of selling costs at 8%, $40,000 of repairs and a $6,000 buffer on them, $9,000 to hold it for 6 months, and a $45,000 profit, leaves $176,000. At 1% buying costs that supports a bid of $174,200. The deal breaks even at $218,800, and if the resale comes in 10% low, the bid that still makes $45,000 is $146,900.
Why a foreclosure auction needs more than the 70% rule
The 70% rule was made for houses you can walk through and buy with a contingency. A trustee sale gives you neither, and each difference is a cost the rule does not see:
- You usually cannot inspect it. The house is sold as is, and the interior is a guess from the street. That is what the buffer on repairs is for.
- Some liens survive the sale. A trustee sale generally clears the deed of trust being foreclosed and everything recorded after it, but not a senior loan or property taxes. Those are yours to pay. How to buy at a trustee sale sets out the title checks.
- Someone may still live there. Possession comes through the state’s eviction process, and a tenant with a genuine lease generally gets more time. See what happens after a trustee sale.
- You pay in cash, now. At the fall of the hammer in California, by 5 p.m. the next business day in Arizona. There is no financing contingency, and the trustee sale cashier’s check calculator plans the checks for your maximum.
- Winning may not be final. North Carolina reopens the sale for 10 days after every upset bid, and a California sale of a one-to-four-unit home stays open for 15 days, or 45. Those days are holding costs.
- The opening bid is the lender’s. The lender bids with the debt it is owed, called a credit bid. When the unpaid balance on the notice is above your maximum, the sale will usually go back to the lender unless it opens lower.
State rules that change your bid
Choose a state in the calculator and it applies these to your number. Each is quoted from the state’s own code in our trustee sale laws by state.
| State | Paying for it | After the sale |
|---|---|---|
| Alaska foreclosure laws | — | None, unless the deed of trust itself grants it |
| Arizona foreclosure laws | $10,000 deposit from every bidder but the lender; the balance due by 5:00 p.m. the next business day | — |
| California foreclosure laws | Cash or equivalent, proved before bidding; the lender may bid the debt itself | A sale of a 1–4 unit home is not final for 15 days, and up to 45 for an eligible bidder |
| Colorado foreclosure laws | — | Junior lienors may redeem after the sale, on the statute's conditions |
| Idaho foreclosure laws | — | None after the trustee’s sale |
| Missouri foreclosure laws | — | One year, but only where the lender bought and the borrower gave notice at or 10 days before the sale |
| Nevada foreclosure laws | — | None; title vests in the purchaser without a right of redemption |
| North Carolina foreclosure laws | Bidding stays open: an upset bid of 5% or more restarts a 10-day period | — |
| Oregon foreclosure laws | — | None for any interest the sale forecloses |
| Texas foreclosure laws | The price is due without delay once the bid is accepted, unless the trustee agrees to more time; the property is sold as is | Only after an HOA assessment-lien sale: 180 days from the association mailing notice of the sale |
| Virginia foreclosure laws | The trustee may require a cash deposit of up to 10% of the price before taking a bid, unless the deed sets another maximum | — |
| Washington foreclosure laws | Cash or certified funds from anyone but the lender | None after a trustee’s sale |
A dash means the sections we quote say nothing on it. For paying, the notice of sale then sets the terms; our notice decoder pulls them out.
Questions
How much should I bid at a foreclosure auction?
No more than the after-repair value less every cost of getting the house resold and less the profit you want: selling costs, repairs and a buffer for what you could not inspect, holding costs, liens the sale leaves in place, the cost of getting possession, and the buying costs on the bid itself. On a $300,000 resale with $40,000 of repairs, six months of holding and a 15% profit target, that is $174,200. Decide it before the auction, and stop there.
What is the 70% rule for flipping a house?
Pay no more than 70% of the after-repair value, less the repairs. The other 30% of the resale is meant to cover holding, selling and buying costs and the profit. On a $300,000 house needing $40,000 of work, the rule says $170,000. It is a quick screen, not a price: it knows nothing about liens a sale leaves in place, an occupant, or an interior you never saw, which is why this calculator shows it beside your own numbers rather than instead of them.
What does MAO mean in real estate?
Maximum allowable offer: the most you can pay for a property and still make the profit you want after every cost. At a foreclosure auction there is no offer to negotiate, so your MAO is your maximum bid, the number you stop bidding at.
What is the opening bid at a trustee sale?
Normally the foreclosing lender's credit bid, made with the debt it is owed rather than cash, and only the lender may bid that way. It reflects what is owed, not what the house is worth, and many notices state no opening bid at all. If what the lender is owed is well above your maximum bid, the property will usually go back to the lender unless it opens lower.
Do liens go away after a trustee sale?
Not all of them. A trustee sale generally extinguishes the deed of trust being foreclosed and the interests recorded after it, but not liens with priority over it. A senior deed of trust survives, and property tax liens generally survive as well. Whatever survives is yours to pay, so it belongs in the calculator as a cost, and a title search is how you find it.
Can I get a mortgage to buy at a foreclosure auction?
Not at the auction itself. Payment is due at the sale or within about a day, in cash or a cash equivalent such as a cashier's check, which leaves no time for a lender to underwrite. Buyers who need a mortgage usually fund the purchase in cash and refinance afterwards; put that loan's interest in your holding costs.
You have your number. Now you need the sale.
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