A bidding war refers to the competition that can often take place between two or more viable buyers at a foreclosure auction. In many states, homes that are foreclosed will be sold by the bank at an auction proceeding. The bidding war is what happens when two or more buyers eye the property at that auction. As one buyer begins the bid, others are willing and ready to outbid them. Ultimately, the bidding war drives up the selling price on the home to the advantage of the seller. A bidding war can be a negative thing for people who wanted to buy a low-cost home at a foreclosure auction, for it can mean that all of the value of the foreclosure home is taken out of the equation. At some point, potential buyers may drop out of the bidding war as the price climbs too high.