Going Once! Going Twice! These are not normally the phrases bandied about during the sale of a posh Upper East Side townhouse. But this was the case recently, when 75 spectators turned out to ogle at the auction of a 4,000-square-foot home on East 62nd Street. The winning bidder paid a cool $2.7 million.

For homeowners who want to sell their properties, live auctions are gaining ground as an alternative to hiring traditional brokers.

“I was skeptical at first, but the auction won me over,” said the lawyer for the seller of the Upper East Side townhouse, David Feureifen. “If my client went to a traditional broker he would not have gotten any more – and probably less – than doing it through an auction.”

The deal on the home, which was sold halfway through a massive renovation job, closed in 60 days, far less than the several months it takes for most deals.

Real estate auctions usually conjure up images of foreclosed properties and cheap sales, but auctions for well-appointed condominiums, townhouses, and single-family homes are also becoming more frequent.

The most common reason for an auction is that a property is difficult to value. This was the case with the Upper East Side townhouse, which “was covered in scaffolding and half complete, and the auction presented the easiest way to determine the price,” said the managing director of the New York office of Sheldon Good, Jeffrey Hubbard. Sheldon Good was the exclusive broker on the sale.

“It can be a great way to sell a property that is difficult to value, and lock in the real market price in a short period,” said a vice president of sales at Express Auction, Oren Klein, who is working on auctioning several brownstones in Harlem in the coming weeks.

Sellers who are anxious to unload a property in a short period sometimes turn to auctions. The truncated closing time, usually 45 to 60 days between listing the property and closing it, is possible because due diligence, including time-consuming title work, is conducted before the property is put up for sale. This can eliminate carrying costs, such as interest, maintenance, and real estate taxes sellers must pay while waiting for a closing.

Developers who own a building where the majority of the units have been sold, but have a handful of apartments left, have used auctions to sell the remaining apartments all at once to a variety of buyers. Residential buyers who take advantage of such a sale can snatch up homes at wholesale prices, “not as cheap as the developer but less than if they had bought it through a broker,” said the chairman of Sheldon Good, Steven Good.

Bidding wars are common in a hot market, and brokers often resort to a “best and final” offer, where interested parties offer their best bids. This is essentially an auction but less direct. “An auction is structured like a best and final, but right from the get-go,” Mr. Good said.

While proponents of auctions say the open bidding process ensures that the true market value of a property is reached, critics say that auctions shortchanges the sellers.

“Rightly or wrongly, when people hear about an auction, they assume there is an immediacy, an emergency, or a need to dispose of the property quickly,” putting them in a bargain mindset, said the head of residential real estate at the Real Estate Board of New York, Eileen Spinola. This may limit what they are willing to pay, she said.

“Auctions are good for the buyer, but terrible for the seller,” said the chairman of real estate firm Massey Knakal, Bob Knakal. “Most buyers associate auctions with a bargain, and they bid accordingly,” he said, often leaving the seller with an undervalued sale.

There are different types of auctions that can determine the parameters of a sale. With an absolute auction, the property is sold to the highest bidder, regardless of the price. More often, sellers can structure the auction with a minimum acceptable price, which does not have to be disclosed to the bidders. If this minimum is not reached, a sale will not go through.

These secret minimum bids “can confuse buyers,” Mr. Knakal said. He added that buyers “see some suggested opening bid listed on the ad that is really low and think they are getting a deal, and when they go and bid that, it doesn’t reach the minimum, and there’s no sale.”

To bid at an auction, potential buyers must bring a certified or cashier’s check that will go toward the purchase price if they win an auction. The amount of the deposit, which is nonrefundable if the highest bidder backs out of the deal, depends on the auction, but for the sale of a $1 million townhouse, it is roughly $50,000, sources say.

These whopping deposits are “the only way to ensure only serious bidders are there,” Mr. Klein said. “It is a way to vet them and ensure they are credible.”

The bids are all-cash, and are not contingent on financing, which means that regardless of whether the buyer can secure financing, all sales are final. This leaves only the cash-rich buyers or those who have pre-qualified for loans, separating out the other buyers in favor of those who can close the deal, say auction experts.

The seller in an auction has to pay fees to cover the aggressive marketing done for a property, including brochures, newspaper advertising, radio spots, and phone solicitation to attract the largest crowd and the highest bids. The advertising budget can run from 1% to 4% of the sale price.

The buyer has to pay what is known as a buyer’s premium, ranging from 5% to 10% of the purchase price.

The trick to buying a property at an auction is knowing what you want.

“You have to be familiar with the market and understand what you are buying,” Mr. Klein said. “It is an exciting and fast-paced atmosphere, and you want to know what you are getting into before you raise your hand.”