DEFINITION of 'Lender Confirmation Auction'

A type of foreclosure auction where the highest bid must be approved and accepted by the lender (usually the bank). Lender confirmation auctions are opposed to an absolute auction, where the winning bid gets the property. The property is typically advertised as "subject to lender confirmation." The sale is still conducted as an auction wherein interested parties bid on the property, but the sale does not automatically go to the highest bidder.

BREAKING DOWN 'Lender Confirmation Auction'

Short sales are another type of real estate sale where a bid for offer is subject to lender confirmation or approval. A short sale, however, is conducted similarly to a traditional home sale, without an auction. A lender confirmation auction is conducted when the lender pursues a foreclosure but will not agree to a bid price that falls below its reserve price.

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