Sheriff Sale Property Auctions

[plowjockey]

Anybody attend them or have purchased realestate property through one? This will be a sale due to foreclosure judgement, not back taxes.

We are looking for a home for MIL and are looking for best cost options. There are a few coming up for sale in our county, anywhere from dumps to really nice ones with $200K judgements.

Certainly the specifics by location vary, but in general, can they be viewed prior to sale?

Also wondering how close they might tend to hit the judgement amount (or exceed), since one dumpy house near me, has a $76K judgement, but the current condition, I would be generous, IMO, to pay $25k.

Also, what about if you have a pre-approved mortage amount, since the Sheriff wants paid the same day the auction ends? Cash will be available, but we like to buy a better house, if the auction price is right.

Just gathering info.

[farmerj]

I went to the sheriff's office once and walked in on one that was about to start.

There was one guy there from the bank holding the mortgage itself.

Sheriff asked if I was there for the sale. Told him no.

He said the bid was like $50K, the man agreed....

Going once, going twice. Last call...

sold, $50K.

The bank just bought a $400,000 farm.

[mountainwmn]

From what I understand, the bank that is owed the money usually tries to buy them. You don't get to view them beforehand, and if people are still living there you just got yourself tenants that may be hard to get rid of. I know with some of the tax sales you are responsible for any leins or judgments, not sure how it would work, but it is possible you could buy a property and then have to pay the mortgage.

[Darren]

check the laws for your state. In some states you don't own the property when you pay the taxes. You have to wait for a period of time perhaps 12 months or 18 months which is allowed for the owner to pay the taxes, fees and interest and redeem the property.

Are you going to a tax sale or a foreclosed property sale? There's a difference. It sounds like you're talking about a foreclosure sale. In any case check for other liens on the property and what you'll have to do if you only pay off some of the indebitedness.

[plowjockey]

Originally Posted by farmerj

I went to the sheriff's office once and walked in on one that was about to start.

There was one guy there from the bank holding the mortgage itself.

Sheriff asked if I was there for the sale. Told him no.

He said the bid was like $50K, the man agreed....

Going once, going twice. Last call...

sold, $50K.

The bank just bought a $400,000 farm.

If I understand you right, the bank basically, purchased their own property back, which just ends up being a legal formality, in this case. Someone would have had to bid over $50k and maybe closer to $400k, to get the property. What did you estimate, that the property might be worth, at that time?

I don't really understand the concept of the Sheriff auction anyway. It's understood why the bank sued the mortgageee, since they likely owe more than the property is worth, but It seem that since the bank, owns the property through forclosure anyway, they could just put it up for sale, or have realtor sell it at auction.

[big rockpile]

Originally Posted by Darren

check the laws for your state. In some states you don't own the property when you pay the taxes. You have to wait for a period of time perhaps 12 months or 18 months which is allowed for the owner to pay the taxes, fees and interest and redeem the property.

Are you going to a tax sale or a foreclosed property sale? There's a difference. It sounds like you're talking about a foreclosure sale. In any case check for other liens on the property and what you'll have to do if you only pay off some of the indebitedness.

Taxes here in Missouri it is 25 years. But this is Forecloser and I'm sure its different.

big rockpile

[farmerj]

Originally Posted by plowjockey

If I understand you right, the bank basically, purchased their own property back, which just ends up being a legal formality, in this case. Someone would have had to bid over $50k and maybe closer to $400k, to get the property. What did you suppose, that the property might be worth, at that time?

I don't really understand the concept of the Sheriff auction anyway. It's understood why the bank sued the mortgageee, since they likely owe more than the property is worth, but It seem that since the bank, owns the property through forclosure anyway, they could just put it up for sale, or have realtor sell it at auction.

The man had check for the exact amount of the bid. I suspect it was pre-arranged.

Had I been there with a check for $51K, I likely could have purchased it myself.

In our local paper, there are 2-3 pages of public notices every week. Similar to any newspaper I have ever looked at.

THOSE are the sheriff sale notices that are required by law to be posted "publicly". Check with the county you live to learn the name of the "official" paper. That is where you will find them.

[Nevada]

Nevada is a trust deed state, so foreclosures are handled at a privately administrated public auction called a trustee sale. It's basically the same thing though.

I bought my home through the trustee sale in Las Vegas. They are currently auctioning 300 to 700 residential properties each day, with an average of around 500 per day. It's a huge opportunity.

The home I bought had an outstanding loan & fees balance of $157,018.68, but I got it for $30,100. I think the starting bid was $24,000. Lenders have had to become realistic about the prices they ask these days. If they don't then the house won't move.

Lenders set a minimum bid that they will accept for the property before the auction. Basically it's their bid on the house. Anything over the starting bid price takes the house. Most starting bids are too high to attract investors. I would guess that 95% of the properties that come up for bid revert back to the bank.

What keeps most people away from the trustee sale is the cash requirement, since you have to be prepared to pay the full purchase price at the auction. Also, with such a high volume of properties being sold there is also virtually no opportunity to view the properties before bidding. You have to be prepared to assume risk when you buy at a trustee sale.

[65284]

mountainwmn, In this area of Missouri the previous tenants in family homes are long gone before the auctions happen. I don't know about commercial properties like apartments. And in Missouri except for some IRS liens, all liens and judgements are extinguished after a tax sale when specific requirements are met and a collectors deed is issued.

[copperkid3]

Guess 'who' arranged the foreclosure sale??? The man (or the company he represented);
the sheriff was strictly the agent in charge of making it a legal and bonafide sale.

The 'man' didn't really buy a $400,000 farm; he paid the amount owing on it; nothing more, nothing less.
Doubtful that you would have picked it up for a thousand dollars more; although in this market,
who knows. Most times however, the 'man' has been instructed by the PTB at the company he represents,
that if someone comes along and starts a bidding war, to go up to a certain point and then quit;
allowing them to make that much over and above the amount owed on the original debt. This is not
a fair market sale where a willing buyer and a willing seller agree on what is a fair price and both parties
are satisfied with the results. This is a distress sale and all bets are off. Have an appraisal done
on that $400,000 farm and I'll be willing to bet that it falls well below half of that in your area.
*************************************

Originally Posted by farmerj

The man had check for the exact amount of the bid. I suspect it was pre-arranged.

Had I been there with a check for $51K, I likely could have purchased it myself.

In our local paper, there are 2-3 pages of public notices every week. Similar to any newspaper I have ever looked at.

THOSE are the sheriff sale notices that are required by law to be posted "publicly". Check with the county you live to learn the name of the "official" paper. That is where you will find them.

[Capt Quirk]

About the only thought I have on this, is to be careful. If the property had been used as a drug lab, the residuals stay for a long time, and can cause health issues.

[Nevada]

Originally Posted by 65284

mountainwmn, In this area of Missouri the previous tenants in family homes are long gone before the auctions happen.

The previous owner and his family were still in the home after I bought it. I had to make arrangements to take possession. In my case I made a deal with the previous owner, but they can be evicted formally by filing an unlawful detainer action with the justice court.

[Danaus29]

Of course sheriffs auctions are prearranged. They are advertised for 90 days before the actual sale and really are open to anyone (in this state anyway) who is willing to basically pay cash for a property in the amount determined by the mortgage or lien holder.

We bought a house through sheriffs auction. We had to have a cashiers check for a percentage of what the published minimum bid was. The balance was due within 30 days so you have no time to get a regular loan for it.

The way the laws are set-up the mortgage company cannot just go and grab a house they are owed money on. It has to go through the auction before the mortgage company can sell the property.

If you can find the paper the sales are listed in you will also find the rules for the sale. According to the one here the properties are not considered viewable but we found out later one of the neighbors broke into the house and that's why it was open. We suspect they were looking to score some copper plumbing since they stole the aluminum screen door.

[Nevada]

Originally Posted by Danaus29

We bought a house through sheriffs auction. We had to have a cashiers check for a percentage of what the published minimum bid was. The balance was due within 30 days so you have no time to get a regular loan for it.

We had to prequalify to bid using cashiers checks, and we were only allowed to bid up to the amount of the cashiers check we brought to the sale that day. They kept a running record of bidders & bid amounts for each property, then the buyer had to perform on 100% of the purchase price right then. If anything went wrong with the transaction then the auction was resumed for that property.

[am1too]

Originally Posted by mountainwmn

From what I understand, the bank that is owed the money usually tries to buy them. You don't get to view them beforehand, and if people are still living there you just got yourself tenants that may be hard to get rid of. I know with some of the tax sales you are responsible for any leins or judgments, not sure how it would work, but it is possible you could buy a property and then have to pay the mortgage.

No if a lien holder wants the property they pay the taxes. A tax lein sale is final with no leins.

[am1too]

Originally Posted by Darren

check the laws for your state. In some states you don't own the property when you pay the taxes. You have to wait for a period of time perhaps 12 months or 18 months which is allowed for the owner to pay the taxes, fees and interest and redeem the property.

Are you going to a tax sale or a foreclosed property sale? There's a difference. It sounds like you're talking about a foreclosure sale. In any case check for other liens on the property and what you'll have to do if you only pay off some of the indebitedness.

That is true they have the right to redeem the property. If they don't you own it free and clear with an unclouded title.

[am1too]

Originally Posted by big rockpile

Taxes here in Missouri it is 25 years. But this is Forecloser and I'm sure its different.

big rockpile

If that is the case there is prolly some provision if the tax sale purchaser add valut to the property such as a fence or building. I'm sure that is the law here in Oklahoma. It used to be anyway.

[Nevada]

Originally Posted by am1too

No if a lien holder wants the property they pay the taxes. A tax lein sale is final with no leins.

If there are liens on a property at a trustee sale in Nevada then the buyer is stuck with the liens. We see that all the time here, where there is a sewer & trash lien in the property from the city. There are serious liens too, such as IRS liens, which can easily amount to tens of thousands of dollars. The good thing about liens is that it's easy to tell, since recorder's office data is usually available online these days.

I always did a lien check before bidding.

[OH Boy]

I don't really understand the concept of the Sheriff auction anyway. It's understood why the bank sued the mortgageee, since they likely owe more than the property is worth, but It seem that since the bank, owns the property through forclosure anyway, they could just put it up for sale, or have realtor sell it at auction.

--------------------------------------------------------------------------------
The Sheriff's Sale concept as I understand it is intended to protect the equity interests of the borrower who is being foreclosed upon by the bank.

For example, if the borrower is not upside down on their mortgage but perhaps falls on hard times and misses just enough payments for the bank to foreclose, the sheriffs sale prevents the bank from just swooping in and 'stealing' the borrowers equity in the property in the guise of satisfying the mortgage on the property.

If there is no oppotunity for other parties to put a bid on the property in the sheriff's sale process the bank would simply take posession of the property at the same value as is owed on it and the borrower would be automatically shafted out of any market equity that they may have had in the property.

Providing an opportunity for other purchasers to bid on the property will (hopefully) cause the sherriffs sale price to more approximate the property's true market value. Any proceeds from the sheriffs sale that are in excess of the outstanding mortgage balance would then be given to the borrower.

[Nevada]

Originally Posted by plowjockey

It's understood why the bank sued the mortgageee, since they likely owe more than the property is worth, but It seem that since the bank, owns the property through forclosure anyway, they could just put it up for sale, or have realtor sell it at auction.

Actually, regardless of whether the property was secured by a mortgage or a trust deed, the foreclosure process does not transfer ownership of the property to the bank. The process by which the bank takes possession of the property is by no one outbidding the bank's opening bid at the sheriff or trustee sale. I would guess that 95% of the properties that I saw go up for bid at the trustee sale reverted to the bank for failure to take a bid.

Banks taking ownership of properties through foreclosure is a common misconception though. I even had a discussion with a realtor who thought the same.