Is this typical of Sheriff's foreclosure sals? (LONG) - Posted by Tim (Cleveland, OH)

Real Estate Investing
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Posted by Tim(Cleveland, OH) on August 24, 1999 at 11:50:36:

Thanks, that helps alot.

Tim

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Is this typical of Sheriff’s foreclosure sals? (LONG) - Posted by Tim (Cleveland, OH)

Posted by Tim (Cleveland, OH) on August 23, 1999 at 12:19:00:

I have begun looking into attending foreclosure sales recently. I am not in position to bid on anything, but thought it might be a good networking opportunity. In any case, I have noticed a few things that I was wondering if they are typical.

  1. When a foreclosure sale is pending, the sheriff will have three disinterested appraisals of the property and take the average. 2/3 of this average is the minimum bid. I have heard of people picking up deals at sales for pennies on the dollar. It seems like this may not be possible in this area unless there is some kind of exception that I don’t know about. Looking at some of the recent results, it seems like if a property sells, it indeed sells for the 2/3 or more.

  2. A full 50% of the sales are withdrawn. recent Results usually indicate “Bankruptcy” or “Order of the Court” if I can find a reason. Is this possibly indicative of a whole lot of investor avtivity in this area, say a foreclosure specialist bringing loans current so the lender calls off the sale?

  3. The VAST majority (like 90% or more)of the sales that do go through go to the mortgagee. This may be afunction of 1) above I would think.

  4. There are certain costs and fees (i.e. court costs) associated with buying at auction. Court may waive these fees if the buyer is a lienholder (mortgagee?) or the lienholder’s assign. What is the prospect of being named a mortgagee’s assign at the sale in order to save what I imagine could be quite a bit of money.

  5. 10% of purchase price is due in cash or cert check when sold. Balance in 30 days, interest free if within 8 days or 10% APR if between 9 and 30 days. Inability to close withing 30 days is contempt of court.

Thanks in advance for any response.

Tim

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Re: Is this typical of Sheriff’s foreclosure sals? (LONG) - Posted by Chris

Posted by Chris on August 24, 1999 at 03:14:13:

  1. When a foreclosure sale is pending, the sheriff will have three disinterested appraisals of the property and take the average. 2/3 of this average is the minimum bid. I have heard of people picking up deals at sales for pennies on the dollar. It seems like this may not be possible in this area unless there is some kind of exception that I don’t know about. Looking at some of the recent results, it seems like if a property sells, it indeed sells for the 2/3 or more.

What I think you’re referring to is when the property is purchased before sale. Then, on occasion, it can be purchased for considerably less money then at auction.
2) A full 50% of the sales are withdrawn. recent Results usually indicate “Bankruptcy” or “Order of the Court” if I can find a reason. Is this possibly indicative of a whole lot of investor avtivity in this area, say a foreclosure specialist bringing loans current so the lender calls off the sale?

In my opinion, this has to do with aggressive mortgage brokers and aggressive lawyers. Since rates are low many people can refi out.

  1. The VAST majority (like 90% or more)of the sales that do go through go to the mortgagee. This may be afunction of 1) above I would think.

This is usually because the property is leveraged to the hilt.

  1. There are certain costs and fees (i.e. court costs) associated with buying at auction. Court may waive these fees if the buyer is a lienholder (mortgagee?) or the lienholder’s assign. What is the prospect of being named a mortgagee’s assign at the sale in order to save what I imagine could be quite a bit of money.

Not sure.

  1. 10% of purchase price is due in cash or cert check when sold. Balance in 30 days, interest free if within 8 days or 10% APR if between 9 and 30 days. Inability to close withing 30 days is contempt of court.

Not sure what the question is.

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Re: Is this typical of Sheriff’s foreclosure sals? (LONG) - Posted by Tim (Cleveland, OH)

Posted by Tim (Cleveland, OH) on August 24, 1999 at 07:47:26:

Hey Chris,

How’s it going? Thanks for responding. Working on what could be my first deal. Will find out if I can put something together this afternoon. Could be a nice first deal.

In any case, what I was getting at is, you always hear what could be tall tales like “I bought a $100K property at the courthouse for $5,000” type of thing. It would seem that the appraisals and minimum bids would all but preclude this from happening here in Cuyahoga county, especially since additional court costs will be added to the price of the property even if you get it at the minimum offer. I need to do more research to find out what these costs run. Do you have any idea?

As for my questions 5), I was just trying to get an idea if this is typical in other areas. I don’t know how far the the court will push it, but I imagine if you are found in contempt, you could serve jail time, Stiff penalties or what? I guess I just thought that if you couldn’t close, you would lose your deposit as opposed to being in contempt. You really have to be sure you can close if you participate inthe auctions.

Tim

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Re: Is this typical of Sheriff’s foreclosure sals? (LONG) - Posted by Jeff (FL)

Posted by Jeff (FL) on August 24, 1999 at 13:08:26:

Tim,

I’ve attended several foreclosure sales on the county courthouse steps here in Florida and I saw many properties go for around $200. At first glance, it doesn’t compute, but then you realize these low bids are being made by the commercial lenders holding the mortgage. The aim is to minimize all of their transfer taxes. No point in trying to outbid them, they just go over you. And they don’t appreciate anyone bidding them up with no serious intentions of buying. It just costs them more in fees and taxes.

So unless you really want the property, which they’ll gladly let you have if you’re serious, it’s probably not a good idea to antagonize them, by costing them needless dollarettes.

Maby that’s how these rumors get started. Just thought you might like to know.

Regards,

Jeff (FL)

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Re: Is this typical of Sheriff’s foreclosure sals? (LONG) - Posted by Mark (SDCA)

Posted by Mark (SDCA) on August 24, 1999 at 10:48:30:

The process you described is vary similar to the one in California. So except for #1, I would say that yes, that is pretty standard.
The 2/3 appraisal IS different. Here the trustee sets the minimum bid which is typically the mortgage balance plus interest and fees. So you CAN get good deals (assuming that the mortgage balance is low) and the owner doesn’t happen to show up. This explains why there is so much competition in foreclosures. Most of the deals have no equity so the minimum bid is at or near FMV.

Hope this helps,

Mark