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How Much Deposit Do You Need for a Property Auction?

Know exactly how much to bring and what happens to it afterward.

  1. Know the typical deposit amount

    A bid deposit is commonly set around ten percent of the minimum bid price, though courts often raise it to twenty or thirty percent for a property being re-auctioned after a previous buyer defaulted. Always check the specific notice for the property you are bidding on.

  2. Prepare it the right way

    A single certified or cashier's check from a bank is usually preferred over cash or multiple smaller checks, since it is faster and simpler for officials to verify on the spot.

  3. Get it back immediately if you do not win

    If you are not named the winning bidder, your deposit is typically handed back to you right after the bids are opened, on the same day.

  4. It counts toward your balance if you win

    If you win, the deposit is not a separate cost; it is simply credited against the total price, reducing the remaining balance you will need to pay later.

  5. Understand you will lose it if you back out

    If you win the bid and then fail to pay the remaining balance, the deposit is generally forfeited entirely. It does not get refunded and is typically distributed to creditors instead, which is exactly why you should have financing lined up before you bid.

  6. Do not confuse it with a rental security deposit

    A bid deposit is a one-time good-faith payment tied to the auction process itself. It has nothing to do with a rental security deposit paid by a tenant to a landlord under a lease, since the two serve completely different purposes.

Why courts require a deposit at all

A bid deposit exists to screen out bidders who are not seriously prepared to follow through, since a winning bid that later falls apart delays the sale and costs everyone involved time and money. Raising the required percentage on re-auctioned properties is a direct response to exactly that problem, since it was caused by a previous bidder walking away.

Plan your financing before you plan your bid

Because a forfeited deposit is not refunded and can represent a meaningful sum, especially at the higher percentages used for re-auctions, the safest approach is to confirm your financing is fully available before you ever submit a bid form, rather than assuming you can arrange it afterward.

Frequently Asked Questions

Can I pay the deposit in installments?

No. The deposit must be submitted in full, in the required form, usually a certified check, at the time you submit your bid. Partial or delayed deposits are not accepted.

What if the property is re-auctioned because a previous winner defaulted?

Courts often raise the required deposit percentage for re-auctioned properties, sometimes significantly, specifically because a prior bidder walked away. Check the notice carefully, since assuming the standard percentage applies could leave you short on sale day.