Home buyers should consider real estate auctions as a viable means of purchasing a home. Some may be thinking distressed foreclosures are all they can find at an auction, but private firms typically hold more auctions. These firms auction everything from builder closeouts to homes from individual homeowners that want a quick sale. There are four important things potential buyers should know about real estate auctions before bidding.

Auctions offer a unique method to sell items based on bidders competing against each other to make a winning bid. The seller tries to make the most money they can from the sale, while bidders attempt to purchase an item for a desired amount. A seller can offer anything at an auction, from valuable paintings to household items. The prices these items sell for are typically set by the competing bidders, not the seller. Although this pattern is true for all auctions, there are many different types of auctions that have different pricing structures.

When you’re buying or selling items at auction, your main focus is likely on values and prices. As a seller, you’ll want to maximize profit, and as a buyer, you’ll want to score a great deal. To make informed decisions, it’s essential to understand the difference between auction value and market value (and what influences them).