I would create an expense account called something like, property bad debt.  Create a credit memo for the unpaid invoice and fees that posts to that account and apply it to the unpaid invoice

All costs to have the auction, as well as the auction income I would post to that […]

Resolution for 'auction income issue: 'Customer property was sold at auction because of failure to pay. New owner’s payment needs to be applied to former owner’s overdue balance. How do I record?' available: Yes.

The auction income issue or error code is a known issue in Quickbooks Online (QBO) and/or Quickbooks. Support for this issue is available either by self-service or paid support options. Experts are available to resolve your Quickbooks issue to ensure minimal downtime and continue running your business. First try to resolve the auction income issue yourself by looking for a resolution described in the article. If it is a complex auction income issue or you are unable to solve the issue, you may contact us by clicking here or by using other auction income support options.

For more information about resolving issues related to auction income in Quickbooks/QBO or to get support for the issue 'Customer property was sold at auction because of failure to pay. New owner’s payment needs to be applied to former owner’s overdue balance. How do I record?', click the link below: