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Auction procedures for foreclosed properties

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Vegan702

Thread Starter
Senior Member
Joined
Feb 24, 2005
Professional Status
Certified Residential Appraiser
State
Nevada
I just received word late this afternoon about a property that we sold a couple years ago and carried the 2nd on. The purchaser went into bankruptcy and we fought the court to get this property out of those proceedings so we could buy it directly from the bank. Well all that happened except the bank doesn't want to sell it for a loss as we weren't going to pay them their legal fees, etc. that they incurred as they were almost $20k supposedly. So the next step is they are putting the property up for auction the Monday after next. Even if we would have paid the bank the payoff amount and legal fees we would have still come out ahead so we definitely don't want to lose this property. We sold it over 2 years ago with a owner carry 2nd as a 30yr due in 5. So we have plenty of equity in the property even with the legal fees as it is one of the few places in Vegas that hasn't declined and has held steady or appreciated slightly over the last 2-3 years.

So the question basically is, how exactly does the auction process work? I believe we have to pay for the property that day which isn't a problem. We have the cash to buy the property outright and we also have a preapproval from the bank as we did all the paperwork in anticipation of the bank taking the short sale loss. Do I have to be there or can I send our lawyer as a representative?
 

Wendy

Senior Member
Joined
Feb 23, 2004
Professional Status
Certified Residential Appraiser
State
Florida
Call your clerk and explain your situation. They will fill you in on the details for your area.

In my neck of the woods it goes like this:
5% of the sale price is due immediately after the auction (11am here) - you have to have the funds on you - no leaving to go get them. Remainder is due by 2pm. All funds must be cash, cashiers check or bank transfer.

Bidding here almost always starts at the judgment amount and first bid is usually placed by the foreclosing party. ie: FC party bids $100. If you want the property you then bid the judgment amount of $xxxx. Bidding goes up from there if multiple parties are involved.

You may have to identify yourself to the clerk and check in prior to bidding - procedure here varies. If I were you, I'd identify myself to the bank's representative as a secondary note holder. Be noisy about it and hope that any others who are interested in the property respect your claim and refrain from bidding. Although if there is equity, it is all fair game and you can expect to get bid against. VERY IMPORTANT - You can not conclude with other bidders. Don't do it.

Representatives can bid around here. Again, call your clerk for information.

If you are inexperienced, be sure you have someone inspect the clerk's file of the property and determine if all other liens are cleared by the sale.

Good luck!
 

Ray Miller

Elite Member
Joined
Feb 20, 2002
Professional Status
Licensed Appraiser
State
Wisconsin
Have run into this several times in RE Auctions. The 1st note holder will generaly bid what there note and cost are unless the property has been trashed and damaged. The second note holder then needs to out bid the bank and any one else, who wants the property.
 

DTB

Elite Member
Joined
Jun 11, 2004
Professional Status
Certified Residential Appraiser
State
Illinois
Why wouldn't you (as 2nd in line) work out a deal directly with the 1st in line? Pay them what they are due and get yourself 1st in line.:shrug:

This can done around here up to the day of sale, has squashed many deals for me. :(

If their is "plenty" of equity in it, be prepared to lose money on the deal. You have to out bid everyone or lose your equity position.
 

Wayne Tomlinson

Senior Member
Joined
Jan 25, 2005
Professional Status
Certified General Appraiser
State
Illinois
How could you possibly have any equity in the second that you hold after a bankruptcy?

It sounds to me as if you really need an attorney to guide you through this, if you haven't been there before. Preferably one who really understands the system. I would interview the attorney first.



Wayne Tomlinson
 

Karl

Elite Member
Joined
Jan 15, 2002
Professional Status
Licensed Appraiser
State
Arizona
This is what investing is all about sometimes you win sometimes you loose. Take your loss & consider it as education. Maybe it's "TAX DEDUCTABLE"

Question how come the folks paying you a second didn't come to you prior to the foreclosure. IF the home is actually in an area as you describe. Were they up to date on the second>??
 

Wendy

Senior Member
Joined
Feb 23, 2004
Professional Status
Certified Residential Appraiser
State
Florida
How could you possibly have any equity in the second that you hold after a bankruptcy?.....

My guess is it did not go through bankruptcy; just started proceedings that were canceled. That happens all the time here.

Good advice on seeking the help of an attorney.
 

murray stroupe

Senior Member
Joined
Apr 27, 2005
Professional Status
General Public
State
Tennessee
Re; Auction Monday after next

How could you possibly have any equity in the second that you hold after a bankruptcy?

It sounds to me as if you really need an attorney to guide you through this, if you haven't been there before. Preferably one who really understands the system. I would interview the attorney first.


Wayne Tomlinson
============
$20,ooo sounds outrageous, but they may have the time in it to justify it;
& probably see more forclosed properties/opportunities,reguardless.

Hopefully, Vegan you have worked with a good ,experienced/skilled RE lawyer, in the past;
prefer some one like that.If not most lawyers advertise ''free initial counsel'',[in yellow pages]
may want to interview 5-7 lawyers looking for agreement.

When one puts his foot on the county courthouse[which is where they auction for closed property & RE tax sales here], the county gov always adds more fees.

Add to that, auction buyers almost always overpays!!!!!!!!!!!!!!!!!!!!!!!!!!!!!;
because emotional bidding, crowd mommentum,people with more money than sense, adjoining neighbors, or sentimental value!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!.

Old timer REALTOR got it right,
best properties almost never make it to courthouse. Course some do well, buy junk- sell antiques.

At the proper time, keep us informed;
should be fun, talking to 5-7 RE lawyers-free initial counsel,
as the yellow pages say.
 

murray stroupe

Senior Member
Joined
Apr 27, 2005
Professional Status
General Public
State
Tennessee
Re

My guess is it did not go through bankruptcy; just started proceedings that were canceled. That happens all the time here.

Good advice on seeking the help of an attorney.
===============
Good guess,Wendy.

Karl lots of people dont like to even ask the bank or lender for help;
like an artic river, frozen @ mouth. Deer shocked in the headlights thing
 

John Hassler

Senior Member
Joined
Jul 23, 2002
Professional Status
Certified Residential Appraiser
State
California
James

Assuming the borrower wasn't paying on your 2nd as well, did you also start the foreclosure process? In CA, as the note holder down the line, you can make the payments on the notes ahead and file your own foreclosure for an amount including the amount of senior debt plus costs. I would consult a foreclosure specialist and see what your options are in NV.
 
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