Are real estate auctions really great deals?

Perhaps. Many experts say the deals could get progressively better for potential buyers as more banks attempt to unload foreclosed properties at below-market prices.

Real estate consultant Jack McCabe, chief executive of McCabe Research & Consulting LLC, Deerfield Beach, Fla., recently told of a developer who had bought at the top of the market and needed to sell some condo units. At auction, some $180,000 units went for as little as $90,000. Three-bedroom units that had retailed for $295,000 to $325,000, sold for as little as $180,000.

But before you go chasing real estate auctions for hot bargains, know what you're getting into.

First, check the background of the auctioneer. There have been a number of real estate scams in which people have unscrupulously taken title to properties.

Second, know what type of auction is being advertised.

You probably stand the greatest chance of getting a good deal at an "absolute auction." That's because with an absolute auction, the seller has committed to selling the property to the highest bidder without any minimum set price.

By contrast, with a "reserve auction," a property is listed for a specific minimum price, undisclosed at the auction. Bill Sheridan, president of the National Auctioneers Association, Overland Park, Kan., says reserve auctions are most often used because sellers frequently need a specific amount to pay off a mortgage.

Certified checks, advance deposits or bank letters of credit typically are required up front to prequalify buyers. An agreement, such as a "terms and conditions" agreement, also must be signed in advance.

If you're having trouble selling your home, a real estate auction can be a way to attract more buyers. The cost can be higher than selling a home through a real estate agent, but it often is shared by more people.

While a seller often pays a commission of 5 percent to 7 percent of the contract price to sell a home through a real estate broker, the cost of auctions could run 7 percent to 12 percent, according to Ben Anderson, chairman of the National Association of Realtors presidential advisory group on auctions. That's because it's not uncommon to have up to three agents involved in a real estate auction.

Commissions can come from the seller, who signs a property listing agreement. There may be a "buyer's premium," or a commission provided by the buyer. There also may be an assessment for auction fees.

If you are considering buying or selling a property through an auction, keep these points in mind:

Auctioneers may turn away sellers whose expectations are too high or who owe too much on a property.

Buyers typically can't buy a property subject to contingencies, such as an inspection or qualification for a mortgage. All this must be arranged before auction.

Agreements that buyers sign before the auction can be binding -- even if a written contract for the purchase of the home has not been signed and a buyer changes his or her mind after auction. If there's a mistake, immediately notify attendants, or "ringmen," to interrupt the auction and get it corrected, Mr. Anderson says.

Potential buyers should obtain copies of the bidder's package in advance and get it carefully reviewed by an attorney.

Sellers need to carefully examine and negotiate the marketing package and budget.

Online real estate auctions often are quite different from traditional auctions. Unless the buyer signs a contract in advance, the online auction is not binding. EBay real estate auctions, a spokeswoman says, are nothing more than ads aimed at letting people start a dialogue.