There is a "notice of sale" in today's paper for a house that my niece is interested in.
It says "approximate amount of judgment is $56,252 plus interest and costs". Does she just go to the public auction and bid?
How does it actually work? Does the bank have to take the highest bid or do they only let the house go if someone bids $56,252? What happens if no one bids that high? If the bank takes $45,000 does the homeowner have to pay the difference to the bank?
Thanks for any information. 1|1|from what i understand .............|pussecat|pu55ecat@aol.com|10:33:36|07/03/2009|
if the bank is auctioning off the house and there's an amount they "need" they will most probably start the bidding somewhere around the actual amount they "need" to get. beware though......... the bank that is actually selling the house may NOT finiance it if it sells. also, at the auctions here in jax that i've seen advertised, when reading the information in the "fine print", not only do participants in the auction have to show proof that they have their own financing already set up, they also have to give a cashier's check for $5,000 before they are allowed to bid. now, if they don't buy anything they are given the check back upon departure. she really needs to call the bank and get the auction details in order to find out if she can even participate in the auction. hth and good luck!
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2|1|oh! and for the bids (what the bank will take)|pussecat|pu55ecat@aol.com|10:38:17|07/03/2009|
they will probably have a "reserve" on the house just like you can do on ebay so if they need $56,000 out of it and the bidding only gets up to $45,000 and they set the reserve at $55,000 they won't have to sell it. also.......... if the bids get up to the amount they "need" they will not stop just because they got the $56,000..... they WILL try to get more. so if 2 people are in a bidding war for the house they will let it go as high as they can before dropping the hammer on the sale. hth also!
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3|2|that's really interesting.....|KellyJef|burke3536@yahoo.com|10:47:39|07/03/2009|
also..........
>if the bids get up to
>the amount they "need" they will
>not stop just because they got
>the $56,000..... they WILL try to
>get more. so if 2
>people are in a bidding war
>for the house they will let
>it go as high as they
>can
If the bank actually gets more than the $56,000, does the original owner get the difference, or does the bank actually keep the "profit"?
Although, our area is so depressed, so I'm pretty sure they would never get more than the $56,000. Actually, I know a little bit about the house and it's my understanding that the house is worth quite a bit less than the $56,000 so my niece would never bid much more than $45,000.
Thanks for your help.
Anybody else have any input? 4|3|no the orginal owner's don't and here's why.............|pussecat|pu55ecat@aol.com|11:06:17|07/03/2009|
the "extra" money would go to the pmi insurance company IF the owners had pmi because they will be paying the bank whatever amount the pmi covered. now, if there was no pmi the bank will get the "extra" money. chances are if they will let the house go for say $56,000 they are losing $ from the default of the loan anyway so it would indeed be the bank's money.
for instance............ if the owners orginally owed 200,000 on the house and paid off 100,000 (thus being able to drop the PMI) and then got laid off and weren't able to pay thier mortgage then the bank selling the home for only $76,000 doesn't give the owner's any "money back" for lack of a better way to say it. see what i mean?
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5|4|If the house goes for more than the mortgage, the orig owners DO get it|sneakers1234|ross417@msn.com|21:21:08|07/03/2009|
the bank cant make $$ off it.
but logically, if the house was worth MORE than the Loan, the original owners would have sold the place themselves.
Be careful. Usually they don't allow inside inspections and frequently the orig owner is annoyed and trashes the place. 6|5|Definely be careful with these type deals|spilleliz|spilleliz@gmail.com|08:06:15|07/04/2009|
I work with an attorney on Real Estate closings. I do alot of foreclosures and bank owned properties. Often these are as is deals and may have violations, damage, even tenants living in there. Also most are all cash deals You can definitely get a good deal but do check into all the details of whats involved
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7|6|wow, we didn't know all this.....|KellyJef|burke3536@yahoo.com|10:13:33|07/04/2009|
It never occurred to us that you don't get to inspect the entire house both inside and outside before the auction :(
Thanks for all the advice. 8|6|but does the original owner have to pay any shortfall?|KellyJef|burke3536@yahoo.com|10:23:30|07/04/2009|
if the house is sold for less than the mortgage balance, is the homeowner responsible for paying the difference? 9|7|I've usually always seen the starting price will cover the mortgage|spilleliz|spilleliz@gmail.com|10:31:37|07/04/2009|
I would think if the person has a mortgage they'd still be responsible for the full amount owed but I think it depends if they worked out an agreement with the bank on it. Now a days alot of the banks will work out stuff with people so each situation is different
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13|5|but ONLY if it goes fro MORE than the mortgage amount|pussecat|pu55ecat@aol.com|10:22:56|07/05/2009|
and what i stated previously was a scenerio where the "profit" above the $56,000 starting bid did NOT cover or exceed the mortgage balance due. hth
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10|1|That;s right-- if the bank agrees to a "short sale" the orig owner is off the hook on the mtg balance.. |sneakers1234|ross417@msn.com|10:46:57|07/04/2009|
BUT it is on his credit record-- he may have to be bankrupt to pull it off.....
Got something good? make an offer... let's trade!! 11|1|Usually the bank bids $1 more than is owed if the |tollman62|thebossatnight@yahoo.com|16:59:52|07/04/2009|
bidding is light and hires a specialty realtor to sell it then. If the house isin a depressed area the bank may let it go at a set point and write off the interest lost. sometimes if the foreclosure action is quick a bank will take less than value as they may have recouped there money already on the mortgage. Short sales are usually something you can negotiate with the bank REO representative. (REO stands for real eastae owned)
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you always hear noises in the dark when you work at night 12|2|Years ago when I worked w/an atty who did these...|Sara_s_Mom|IClipCoupons@gmail.com|19:00:06|07/04/2009|
He went to the sale to bid on the house to win it back. He told me then that most of the time, the bank is the high bidder. Then what they do is they list it for sale with a real estate company.
They are as-is. And foreclosed property is tricky since you don't know what the po'd owners did to the property. There could be no light fixtures through out, damage to the walls, etc. etc. In the past, the bank my boss bid for would find fences removed, no light fixtures, spray painted walls, concrete down the toilet, smashed toilets... so tread carefully. Not everyone leaves their home peaceably!
If someone was interested in buying a house this way, especially the first time, I recommend consulting an attorney.
I have heard of people snapping up good deals by bidding on homes that go for back taxes. The trick there is to pick only homes that do not have other liens against them - this requires a title search. Quiet title actions are NOT cheap and in PA at least, the owner who lost it to taxes needed to sign off on a deed. Still, very tricky.
My sister's honey just bought a foreclosed home - it was bank owned by then - and holy cow, 2 days before closing they discovered a huge leak in the wall related to the sprinkler system. The bank said "as-is" so he either had to take it as-is or walk away.
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14|1|here are 2 sites i found this morning. hth|pussecat|pu55ecat@aol.com|10:24:37|07/05/2009|
this one is VERY helpful
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15|2|wow, good thing I read the article you posted...|KellyJef|burke3536@yahoo.com|11:27:55|07/05/2009|
It sounds like this could really get a novice buyer into a lot of trouble:
A foreclosure auction is designed to sell foreclosed properties at whatever price someone is willing to pay. The final sale price could be considered "bargain basement" pricing in most cases, because the properties have to be purchased with cash in most states, so the buyer pool is limited. The actual auctions are regulated by state law, but the individual county where the property is located actually dictates the specifics of how the actual auction works.
As a rule-of-thumb, the property is offered to the highest bidder by a clerk of the court, a sheriff, or a trustee. The auction is by "open outcry" so that everyone knows what bids are being made. Usually there is a minimal incremental bid which can be $100 to $1,000 or more. It is interesting to watch a novice get excited and bid in increments of $5,000 or even $10,000 in his excitement to get a particular property. The pros who frequent the auctions target unsuspecting "newbies" because they know the newbies have no rational bidding methods and the pros use their experience to bid up the properties the newbies are trying to buy.
The auction or sale starts with the auctioneer asking for an opening bid. Someone will respond and in most cases it will be the bank that starts the foreclosure proceeding. The bank will usually start the bid for the final judgment amount which is the outstanding loan balance, plus the foreclosure processing costs. Let's use an example of XYZ Bank who has a final judgment amount of $200,000 including all costs and expenses. Usually XYZ Bank would start with a bid of $100, because the starting price is most often the final judgment plus $100 as the first bid. Lower bids could start the sale but generally XYZ Bank will always bid the amount owed plus $100 to cover the minimum bid.
In recent months, many banks have started the bid at less than the amount owed them. This is a fairly new strategy that is designed to overcome the issue of doing short sales with investors and all the hassles that go with them. For example, if the bank is willing to discount the loan to 80% of a recent Broker's Price Opinion (BPO), on a $200,000 balance due, they would start the bidding at $160,000. If there were no other bids, the bank would own the property anyway because they have a "credit" to bid up to $200,000 because of the final judgment amount. If anyone bids or the bidding gets heated, the bank will only get their $200,000 reimbursed and the highest bidder above that amount will get the property. If the final bid is, for example, $250,000 the additional $50,000 is called "overage" and will be returned to the homeowner under most circumstances.
Professional buyers who frequent the auctions daily have developed advanced techniques to beat out other bidders and to use "mortgage credits" as real money. Their most advanced technique for stopping competitive bidders is to only bid in the incremental amounts of say $100. This gets the competition very hassled and they will often start jumping the incremental bids in large amounts ($5,000 - $10,000) to get the "pro" to stop bidding. The pro just keeps coming back with an out cry of "plus $100". Eventually, the newbie will quit bidding and the pro will take the property for $100 over the last bid. If the newbie bids well past what the pro wanted to pay, the pro keeps bidding and making the newbie go higher and higher, until the newbie quits because he comes to his senses or doesn't have enough money. But it is not over yet because the pro now reneges on his last bid and the newbie gets the property at a grossly inflated price!
Another advanced tactic the pros use is to buy the worthless second mortgages for a few cents on the dollar. These liens are transferred to the pros at full face value so the pro will pay perhaps $500 for a $25,000 lien. Now the pro has a "bid credit" of $25,000. When the bidding starts the pro starts bidding to pull in newbies from the crowd and can continue bidding for $25,000 without it costing him any money other than the $500 he paid for the second mortgage (lien). Here is where it really gets going - the pro keeps aggressively bidding until the competitor, usually a newbie, quits (i.e. $20,000) and the pro reneges on his last bid. The newbie now owns the property at $20,000 over the first mortgage amount due and the pro has turned $500 into $20,000 with his only risk being his original $500.
The pro uses "shill" bidders so if he has to renege he doesn't get barred from the future sales. There are many other tricks of the trade that the pros use, so if you decide to buy a property at the foreclosure auction you better beware of the hazards. Also find out ahead of time what additional costs the county charges such as auctions fees, title transfer, document stamps, etc. so you aren't surprised at how much money you need for the final purchase amount.