# auction



## morninglory (Aug 7, 2003)

I have no knowledge of how an auction for real estate works when it is held on court house steps. 
I have my eye on a special place that i am told by the owner is in forclosure. I can assume it will be advertised for a specific length of time in the local newspaper and then be sold on courthouse steps. 
I know that a certified check has to be presented at that time. It is in a state very far away and I wont make the drive for the auction in case it is canceled(not even considering driving on all the icy roads to get there) . i have someone who can represent me at the auction. i have an idea what the lowest and highest my bid amount will be but no idea what amount will be accepted. what do you do? do you write out several certified checks for each amount that may be bid? just one for starting amount and highest amount?it has to be a certified check or letter from back certifying you have the funds. I have placed many calls and can get no answers and sometimes very rude people that i even bothered asking the questions. anyone here had the experience of buying from one of these types of auction.it is a foreclosure not a tax auction if that makes the difference.
I have spoke to the owner of this property and they owe about 4 times what the place is worth therefore i cannot purchase direct from them.


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## Fishindude (May 19, 2015)

I bought a small farm in just the manner you are describing. We were out of state at the time of auction, so I had a gentleman I knew and trusted represent me and do my bidding. We discussed beforehand the max. amount I would bid.

Don't remember the exact details, but in most cases the winning bidder has to put down a hefty downpayment, then has a limited time to come up with the balance. Seems like it was 10% down, 10 days to pay balance? If you don't hit the deadline, you forfeit your downpayment. So just make the downpayment check 10% of the maximum you intend to bid. If you buy the place a bit cheaper, nobody will complain about you paying too much downpayment.

This stuff is easy enough to figure out. Call up whatever office in the courthouse is handling the sale and they will walk you through the process.


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## Ellendra (Jul 31, 2013)

Is it being foreclosed by the bank, or by the county, or by the IRS? Each has a different process.

If it's the bank, check their website. Most banks have a link you can click to find out about the repossessed properties they're selling.


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## Clem (Apr 12, 2016)

Call them and ask them. Usually there is a deposit, and the balance paid upon closing.


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## Michael W. Smith (Jun 2, 2002)

I've never dealt with a foreclosure - but you should check ahead of time to make sure the amount you bid actually buys the property "as is" and that there aren't any other outstanding liens or debts with it that you will be responsible for.

I see ads in the paper all the time, for an auction "at the courthouse steps" but never actually went to see how it worked.

Bear in mind, I think the owner can actually come up with the money and pay it up to an hour before the sale - so I'm sure some sales are canceled - so the bidder may be going for nothing.


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## haypoint (Oct 4, 2006)

In my experience it is just a way for the bank to "clean up" the title. They bid what is owed on it and you've wasted your time standing around on the cold courthouse steps. No bargains. 
Later, the bank lays the property off on whoever they sold the debt to, generally Freddy Mac and it's the federal government's problem. The Feds have contracted companies that renovate enough to get it sold, a few years later.


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## Darren (May 10, 2002)

I've heard of the bank bidding in what is owed lots of times. Going may or may not be a waste of time. Likewise it may or may not be a deal.


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## morninglory (Aug 7, 2003)

thanks for all the suggestions. this is a loan company that will be foreclosing on an unpaid loan and an auction co. that deals in just this type of thing. the owner tells me what he owes and he has been wanting it to be foreclosed for a while so i am certain he will not take it back at the last minute. my intentions are to start out at a low bid and i do have a price amount that will be the absolute top dollar that i will pay for it. The person i have to stand in for me is very trusted, i just dont know how much to make the check for. after reading all of your input, i think i will make the certified check out for the lower amount that i want to bid. that way if it does go for the higher amount , the check will be simply the down payment.


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## po boy (Jul 12, 2010)

morninglory said:


> thanks for all the suggestions. this is a loan company that will be foreclosing on an unpaid loan and an auction co. that deals in just this type of thing. the owner tells me what he owes and he has been wanting it to be foreclosed for a while so i am certain he will not take it back at the last minute. my intentions are to start out at a low bid and i do have a price amount that will be the absolute top dollar that i will pay for it. The person i have to stand in for me is very trusted, i just dont know how much to make the check for. after reading all of your input, i think i will make the certified check out for the lower amount that i want to bid. that way if it does go for the higher amount , the check will be simply the down payment.


This works different in each state. The ones I bought required cash or certified funds for the full amount on the date of sale. The person making the winning bid has to show the foreclosing attorney his funds.

The lender normally bids the payoff plus cost to foreclose.


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## haypoint (Oct 4, 2006)

long story short, the auction price will be amount owed to the bank. That amount is always going to be higher than the place is worth. Otherwise, the owners would have sold it.


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## morninglory (Aug 7, 2003)

Owners cant sell it if more is owed against it than it is worth.That is the case here. This particular place is only worth maybe 35000 tops but the person owes 90 on it .without paying off his debt the lender wont release the property to be sold by the owner.


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## RonM (Jan 6, 2008)

In Delaware the original whom the forfeiture is against also has 30 ddaays to come in and clear the debt and regain the property, so even if you buy it, the owner can within 30 days snatch it from you..by clearing up the debt against it..


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## Micheal (Jan 28, 2009)

Something that may or may not be (in your state) but here in NY the new owner also becomes libel for any other undisclosed liens against the property.


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## haypoint (Oct 4, 2006)

morninglory said:


> Owners cant sell it if more is owed against it than it is worth.That is the case here. This particular place is only worth maybe 35000 tops but the person owes 90 on it .without paying off his debt the lender wont release the property to be sold by the owner.


Right. In this case the lender shows up and bids it up as high as they need to in order to keep it. If it goes past 90, the lender lets it go and the lender's debt is satisfied. Anything less and the lender retains ownership. No way is the bank going to take a 55,000 loss.

I'dcsuggest you go, watch it happen. Then talk to the Bank's bidder and find out what their next step is. Could be quite educational.


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## tired_gardener (Dec 14, 2016)

I bought the house I'm sitting in now in foreclosure and it was much like any other real estate deal. The bank had possession, so they sold it through an agent who only dealt with that type of foreclosure (Freddy Mac). But each foreclosure is different. Some are at auction, but most of them have a way you can bid online.

Also, if it is "in foreclosure" but the owner is still there, it is most likely "pre-forclosure" and you can make a deal with the current owner. The bank will most likely have to approve the offer, but it saves you some energy and waiting and saves the owner from a foreclosure on his record (although, he would still have all the late payments on his record).


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## tired_gardener (Dec 14, 2016)

haypoint said:


> No way is the bank going to take a 55,000 loss.


Actually, sometimes the banks will. They will look at it and say "If we went through the process to keep it, how much would we get? and if the answer is "we would look more than $55k" then they would be happy to have only a $55k loss. It costs money to foreclose and they want to loose as little as possible.

Keep in mind now, that I've read a lot on the subject, but have no real life experience, so take my input with that in mind.


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## TnAndy (Sep 15, 2005)

haypoint said:


> Right. *In this case the lender shows up and bids it up as high as they need to in order to keep it.* If it goes past 90, the lender lets it go and the lender's debt is satisfied. Anything less and the lender retains ownership. No way is the bank going to take a 55,000 loss.
> 
> I'd suggest you go, watch it happen. Then talk to the Bank's bidder and find out what their next step is. Could be quite educational.


That is almost always what happens....the first 'bid' is the lender, for whatever amount is owed. You won't have the chance to 'start off low', because the auctioneer already has the lender's bid.....he/she will open the auction by saying "I have an opening bid of $........."

If 'the place isn't worth that' in the opinion of other bidders, the auction is over at that point. Extremely rare for it to go any other way.

NOW, later, after the bank sits on the property a while, sometimes you can get them to accept reality, and take a lower price. But as long as they don't sell the place, they get to keep it on the books as an 'asset', which helps their required capitalization amount.....so they often don't care if it sits there melting down into nothing for years.


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## TripleD (Feb 12, 2011)

I have bought plenty at way less than what was owed. The banks don't want all the lawyers fees to keep going up. I bought one that had a balance at $59000 and the opening price was $32450. 

I closed on it at 10:00 AM and rented it to the old owner at 11:30 the same day. The banker told me they were in the interest business not the housing business. That renter has paid over a third of my purchase price... I just had to add this is what I do for a living. My tenants pay for my lifestyle.....


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## TnAndy (Sep 15, 2005)

Yeah, I built some houses just for rental. 1st one, a tenant lived in 5 years, paying me $800/mo ($48,000), about my material cost to build it to begin with, then asked me if I'd sell it to him....I did, for market value which was 100k.

Sweet part of that deal is it was ALL unearned income and I paid zero social security tax on it, versus the 15.3% I was paying for my self employed income.....and the 100k was taxed at capital gains, since I'd held the house over a year....10% versus about double that on ordinary income tax rate !


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## morninglory (Aug 7, 2003)

this is all happening in the state of missouri. I am really getting nervous about the entire deal. I certainly dont want to assume all that is owed against this property. now i am in texas and it is not, absolutely not, an option for me to go there.


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## tired_gardener (Dec 14, 2016)

morninglory said:


> this is all happening in the state of missouri. I am really getting nervous about the entire deal. I certainly dont want to assume all that is owed against this property. now i am in texas and it is not, absolutely not, an option for me to go there.


I would contact the bank and see if they would do a short sale. Many banks are very willing to do this to get it off their books and get their money working for them again.

"A short sale is a sale of real estate in which the net proceeds from selling the property will fall short of the debts secured by liens against the property. In this case, if all lien holders agree to accept less than the amount owed on the debt, a sale of the property can be accomplished." - Wikipedia


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## morninglory (Aug 7, 2003)

I have tried to contact the finance company and cannot find appropriate people( so far) to speak to. Everyone i have spoken to acts like they know nothing about the repossession of this property.


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## DryHeat (Nov 11, 2010)

Just as a speculation, I wonder if in some cases, especially in smaller communities, there isn't a good-ole-boy network of folks who'd rather keep seeing each other play repeating roles in this process. House flippers, renovation contractors, banks and loan companies who want to keep assets on their books, preferred investors in rental investments, perhaps including the foreclosing enforcement like the sheriff's office. Maybe family of the loan company employees know family of renovators and they just develop amnesia when any calls from outsiders that might interrupt their familiar process come in? Big cities, big banks, I'd think that might be much less of a factor but not rural loan companies of the sort that would allow the owner to rack up a debt like that?


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## Fishindude (May 19, 2015)

*this is all happening in the state of missouri. I am really getting nervous about the entire deal. I certainly dont want to assume all that is owed against this property. now i am in texas and it is not, absolutely not, an option for me to go there.*

Pay a title company to do a search to see if there are any liens against the property in addition to what is owed to the bank. Can usually get this done for a couple hundred dollars.


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## GTX63 (Dec 13, 2016)

Usually a local broker or two, depending on the area, handle the majority of foreclosed property listings. They will have a short list of investors they contact everytime a property is coming up for sale. If you go to these auctions much at all, you will likely seem the same faces over and over. Cash buyers with an inside track. Buying forclosed property can be a good deal if you aren't afraid of "as is" conditions and do your own due diligence in advance, however, like most good things, word has spread and the nuggets are fewer and farther between.


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## LuLuToo (Dec 19, 2015)

Are you sure it is being sold 'on the courthouse steps'? I've never heard of a repossession being sold that way. If it is repossessed by the bank, they usually open the property for examination, then entertain bids for a specific period of time. If enough bids come in, they may accept a bid or may ask all bidders to place a higher bid, if they did not receive a bid amount high enough. 

Properties sold 'on the courthouse steps' are usually being sold for back taxes. 

I would clarify the situation. If it is being repossessed, contact the mortgage holder.

LuLu


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## LuLuToo (Dec 19, 2015)

Are you sure it is being sold 'on the courthouse steps'? I've never heard of a repossession being sold that way. If it is repossessed by the bank, they usually open the property for examination, then entertain bids for a specific period of time. If enough bids come in, they may accept a bid or may ask all bidders to place a higher bid, if they did not receive a bid amount high enough. 

Properties sold 'on the courthouse steps' are usually being sold for back taxes. 

I would clarify the situation. If it is being repossessed, contact the mortgage holder. Don't be too surprised if the repo/ resale process takes a couple years.

LuLu


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## FarmerKat (Jul 3, 2014)

LuLuToo said:


> Are you sure it is being sold 'on the courthouse steps'? I've never heard of a repossession being sold that way. If it is repossessed by the bank, they usually open the property for examination, then entertain bids for a specific period of time. If enough bids come in, they may accept a bid or may ask all bidders to place a higher bid, if they did not receive a bid amount high enough.
> 
> Properties sold 'on the courthouse steps' are usually being sold for back taxes.
> 
> ...


I had the same question. Also, I would think that if the original owner is still in the house, the bank has not taken possession yet (i.e. the deed is still in the owner's name with the bank's lien on it as opposed to the deed being in the bank's name). When the bank forecloses on a property, they evict the current owner. All of that takes time - even if the owner is doing a "deed in lieu of foreclosure" (aka voluntary foreclosure). The bank cannot sell something they do not own.


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## TnAndy (Sep 15, 2005)

LuLuToo said:


> Are you sure it is being sold 'on the courthouse steps'? I've never heard of a repossession being sold that way.



Done all the time in Tennessee....I've been to quite a few.


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## LuLuToo (Dec 19, 2015)

TnAndy said:


> Done all the time in Tennessee....I've been to quite a few.



Hmmm... live and learn! They only sell for owed back taxes like that here.

LuLu


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## WannabeWaltons (Nov 18, 2016)

Are there any websites that list auctions for properties sold for back taxes? Are they really sold for the amount of taxes owed? Has anyone had luck buying land to homestead on this way?


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## FarmerKat (Jul 3, 2014)

I have seen this as a search option on the tax collector's site for a county. I know someone who bought a piece of land worth $2-3 million for $75K in back taxes. But I do not think that deals like that come along all the time.


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## AmericanStand (Jul 29, 2014)

Wonder what happened ?


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## Forcast (Apr 15, 2014)

Just went to one on court house steps i was the only one the seller had an opening bid that was way out of line.


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## AmericanStand (Jul 29, 2014)

In Illinois part of the foreclosure Process includes a public sale. 
This is supposed to insure the the debtor doesn't get saddled with a big deficiency just so th bank can sell cheap to get it off the books
For some reason it doesn't seem to work though. 
You did know the debter still has to pay everything off even in a for closure ?


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## AmericanStand (Jul 29, 2014)

In Illinois part of the foreclosure Process includes a public sale. 
This is supposed to insure the the debtor doesn't get saddled with a big deficiency just so th bank can sell cheap to get it off the books
For some reason it doesn't seem to work though. 
You did know the debter still has to pay everything off even in a for closure ?


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## haypoint (Oct 4, 2006)

I have a friend that buys hundreds of back tax properties each year. When I say "buy" I mean he pays up the back taxes at a County Tax Sale. Owner has a year to catch up a year of the back taxes, plus 1% interest per month (figures out to be just a bit more than 12% annual interest. If not paid within a year they have more time, but must pay something outrageous like 50% over amount of taxes. So, it is an involved process. He does it as a hobby. The interest he earns is far greater than he'd get at a Bank Savings Account. There is a bit of time lapse between the owner paying the taxes, plus interest and the County collecting your S.S. number for tax purposes and actually getting the check.

Rarely, the owner let's it go. In those rare cases, often the property is worthless. One time he ended up with a worthless strip of ground, 400 feet long and going from 12 feet at the road back to 40 feet wide at the back. He offered it for a few hundred to the Ford Dealership next door. They didn't want it. He had it surveyed and the new Showroom was overlapping his lot. He demanded they remove that part of their building. He said he ended up with a new car.


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## Forcast (Apr 15, 2014)

They also may state buyer takes on anyone living in the home as well as personal proptery left. The 3 I attended in Wv the opening bid was made by the bank an was what was owed. Yep cold February morning on the steps.


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## AmericanStand (Jul 29, 2014)

I just attended one. 
With just over $60,000 owed the second best bid was $18,000 the bank bid a dollar more. The bank will now ask for a $60,000 judgement against the original owner.


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