The other thing that is frustrating with foreclosure sales, in addition to paying market value or a premium due to hype of auction, is that you don’t know what your winning bid will be, and generally have to have certified funds ready in a short period of time, as quickly as 1 hour after the sale. Obviously you need deep pockets to participate…the “pennies on the dollar” concept is just a myth.
better to go after an REO property being held by a lending institution. Less desirable, but they might unload it cheap AND give you a financing deal at the same time with many closing costs, etc, waived.
How does it work. If a home is worth 100k and borrower took out 80/20 loans and the first loan is being foreclosed on, where does the bidding at the auction start? 80k or 100k? If it starts at 80k, I assume its possible to get below market price despite the fact the homeowner has no equity? How does this work?
What happens if the second is the foreclosing lien holder?
Re: Where does bidding start at foreclosure - Posted by Bill Jacobsen
Posted by Bill Jacobsen on September 11, 2007 at 17:12:49:
My experience is that the foreclosing entity will start the bid at the amount that they can legally start with. This represents their costs. It is possible to get a below market price if there is no competition but there is usually competion and you pay market price given the fact you are buying a house of which you know nothing.
This is probably my least favorite way of buying houses.