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Interesting way to NOT sell a foreclosure

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JRS at OBX

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Elite Member
Joined
Jun 13, 2006
Professional Status
Certified Residential Appraiser
State
North Carolina
I was looking through the foreclosure auctions in my county and found a very nice soundfront house listed. The auction was a few days ago so it is still in the 10 day upset bid period. The opening bid was $101,000. The house has a tax value of $675,000 and you could probably list the house for 500,000 and have it under contract in a week.

So I started doing my research. If I could get this house for 100,000 I would be thrilled. I spent half the day looking for the catch. I searched the courthouse records for judgements, liens, etc. I checked the website and found the catch.

The auction that happened a few days ago was from the lender that has a second mortgage. They want $100k. Next month there is going to be another auction on the first mortgage. That mortgage was in the amount of $650,000.

So lets say I make a bid on the first auction and win. They would expect me to close in 30 days, but what would I be closing on?? If I win the first auction and somebody else wins the second, what happens?? Roomates? :rof:

Both foreclosures are being handled by the same attorney, did they screw up? Needless to say, I'm not bidding on this one. :shrug:
 

Wendy

Senior Member
Joined
Feb 23, 2004
Professional Status
Certified Residential Appraiser
State
Florida
I see it happen pretty often here. Second goes to auction just before the first position. Every now and then some sucker falls for it too. FC auctions are not for the faint of heart or unprepared.

Although what's up with a 30 day close on a FC auction? Is this a court house steps deal or just a real estate auction?

Here, once it sells on the steps, you have 3 hours to pay up in cash and the redemption period is not open to higher bids.
 

Mr Rex

Elite Member
Joined
Jan 12, 2004
Professional Status
Certified Residential Appraiser
State
North Carolina
I see it happen pretty often here. Second goes to auction just before the first position. Every now and then some sucker falls for it too. FC auctions are not for the faint of heart or unprepared.

Although what's up with a 30 day close on a FC auction? Is this a court house steps deal or just a real estate auction?

Here, once it sells on the steps, you have 3 hours to pay up in cash and the redemption period is not open to higher bids.

In NC, the courthouse steps sale is open to upset bids for 10 days, new bids must be 5% higher than existing bid. After 10 days passes without an upset bid, 30 days to close.

NC is a Deed of Trust state, might differ from true Mortgage states. Is FL a Deed of Trust or Mortgage state?
 

Greg Bell

Senior Member
Joined
Jul 7, 2006
Professional Status
Gvmt Agency, FNMA, HUD, VA etc.
State
Louisiana
Second the third mortgages will always try to get out of the loan if they feel the equity may bail them out.If the first forecloses they are wiped out and don't get a nickel.Make sure the second holder has paid the first current , if not you will have to make the first current or get wiped out.I would only play with first mortgages and watch for IRS and local Tax liens..
 

moh malekpour

Elite Member
Joined
May 25, 2002
Professional Status
Certified Residential Appraiser
State
California
I was looking through the foreclosure auctions in my county and found a very nice soundfront house listed. The auction was a few days ago so it is still in the 10 day upset bid period. The opening bid was $101,000. The house has a tax value of $675,000 and you could probably list the house for 500,000 and have it under contract in a week.

So I started doing my research. If I could get this house for 100,000 I would be thrilled. I spent half the day looking for the catch. I searched the courthouse records for judgements, liens, etc. I checked the website and found the catch.

The auction that happened a few days ago was from the lender that has a second mortgage. They want $100k. Next month there is going to be another auction on the first mortgage. That mortgage was in the amount of $650,000.

So lets say I make a bid on the first auction and win. They would expect me to close in 30 days, but what would I be closing on?? If I win the first auction and somebody else wins the second, what happens?? Roomates? :rof:

Both foreclosures are being handled by the same attorney, did they screw up? Needless to say, I'm not bidding on this one. :shrug:

In the foreclosure sale, the first lien gets paid first and if there is anything left, the second will get it. The only recorded lien that goes ahead of the first lien is the property tax lien. The first lien has to pay off the property tax lien in order to be able to sell the foreclosed property but doesn't have to satisfy other junior liens. The first can wipe out all junior liens if the sale price is not enough to pay anything to them. but if the second decided to foreclose, it has to satisfy the first and the property tax bills before covering its own money.
 

Mountain Man

Elite Member
Joined
Jan 15, 2002
Professional Status
Certified General Appraiser
State
Georgia
I see that all of the time. Who ever bids and wins the auction on the second will have to pay off the first. The second mortgagees are usually fast on the draw to file for foreclosure, because they have a lot to lose and they may find some sucker to bid it. Once the first mortgagee receives notice that the second is foreclosing, they will start foreclosure procedures just in case the second doesn't complete the process. But more often than not, the second is just screwed...
 

murray stroupe

Senior Member
Joined
Apr 27, 2005
Professional Status
General Public
State
Tennessee
JR, @ kill devil hill said I am not bidding[on that one]

[QUOTE
Wendy writing-
Mr Rex;1503539]In NC, the courthouse steps sale is open to upset bids for 10 days, new bids must be 5% higher than existing bid. After 10 days passes without an upset bid, 30 days to close.

NC is a Deed of Trust state, might differ from true Mortgage states. Is FL a Deed of Trust or Mortgage state?[/QUOTE]
===========================
They changed that in TN law,Mr.Rex, or changed the way they apply it;
used to not have an upset period advertised in local paper. They do now;
at least on tax lien sales.

One old REALTOR said the best properties usally never make it to courthouse sale.Probably not applicable on this one, property assoc liens can be deal killers also, especially with lots of recreational overhead supply.

Some have made money perhaps buying property unseen, dont like to do it that way.Commercial hog operations do happen, seldom mentioned;
much different from a family farmer with a few hogs, or potbelly pigs.

Terell had another helpful point, some sort of tax lien [not property tax],
wasn't recorded @ all, except at the very last minute. No wonder old REALTOR said best properties usallly don't make it to courthouse sale.
 
Last edited:

Terrel L. Shields

Elite Member
Gold Supporting Member
Joined
May 2, 2002
Professional Status
Certified General Appraiser
State
Arkansas
Someone seriously interested in the property will have to settle the second lien and if they can negotiate with that lien holder it allows them to get out easy.
 
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