Sheriff's Sale

[dooleysm]

There is a double-wide trailer on 2 acres adjoining my land that I know has been abandoned. I know the woman that owns it (for the time being) and I know how much she owes on it. She is willing to sell it to me for what she owes. However, this is more than I am willing to spend and I believe it is more than it is worth.

I called the bank that has the mortgage on it and they are unwilling to deal with me on it until after the property has gone through foreclosure and through a sheriff's sale. As I understand it after the property is foreclosed there is a sheriff's sale where anybody may bid on and purchase a property. I also believe that the bank tends to send a representative there that makes sure the property sells for some amount, likely near what they are owed on it.

I'm not real clear on the sheriff's sale though and all my knowledge is just heresay. Does anyone out there know more about this process?

 

[dmccarty]

We had a similar situation years ago. A house was about to be foreclosed and we knew what the house was worth. The asking price was much, much higher than what it was worth.

After talking with a couple of lawyers our understanding was that once the house was foreclosed it would be sold at auction at the courthouse to the higher bidder. The banks would "bid" what they were already owed so we would have to be higher than the loan amount. Then any liens on the property would have to be delt with.

Talk to a local lawyer or two, none of them charged us for the talks we had, and visit the courthouse to talk to the county employees. We found them very helpful. The county can tell you if there are any liens on the place.

Later,
Dan

 

[Jimbrown]

We have two types of foreclosure sales here. Sheriff sales where the sheriff auctions it off to the highest bidder. Unless there is some underhanded dealing it will usually go for close to prevailing price. realtor's ect buy em up. the other is a tax sale where the county has foreclosed for taxes. These are usually stuff no one really wants. You can buy these two ways just go to the court house and pay the tax or wait for it to go to auction. They will not sell for less than the owed taxes. But there are literally hundreds of lots for sale in the county just for taxes ( less than a$1000) most are mobile home lots in defunct mobile home parks. Or land that was part of some fly by night real estate deal in the middle of no where no power, water, roads ect.

 

[MossRoad]

Be careful with those sales. Sometimes you can buy the house for what the person owes in back taxes. However, the person has a year from then to pay you for the taxes and the interest, then they get the house back. You make the interest if they do it and you get the house if they don't. I read something about Indiana's rules and to sum it up, there are 92 counties in Indiana and that means there are 92 different sets of rules!

 

[2manyrocks]

You need to get some legal advice before you bid. There may be a little information here, but only a little, and there are usually many, many issues to consider before bidding at a foreclosure sale. Sheriff's Sale FAQ's

My guess from what you have said is the bank is foreclosing, but the Sheriff has to conduct the sale in the county where the property is located. The bank is probably going to make a bid to prevent the property from being sold too cheaply relative to what the bank thinks they can get for it, but the bank probably won't make this public until it bids at the sale. The bank may not care and just bid what they have owed against it and then try to resell for what it can get.

You need to be sure about the title and the presence of other liens before you bid. For that, you need a title examination. Of course, the property condition is also something you may be taking a chance on if you can't get inside the house to look at it before the sale.

 

[chh]

There was an article on forclosure's and sheriff's sales in a newspaper here in Oklahoma not too long ago. The thing that caught my eye on it was that something like 98% to 99% of them sell back to the lender and that they are usually the only bidder.
A piece of property near me sold not long ago at a sheriff's sale after foreclosure, the guy who bought it got it direct from the bank. He had actually made a deal with the bank to buy the property before the sale, but on legal advice let it go thru the sale to settle all/some of the title issues(or at least that is the way he explained it to me).

 

[MossRoad]

There was an article on forclosure's and sheriff's sales in a newspaper here in Oklahoma not too long ago. The thing that caught my eye on it was that something like 98% to 99% of them sell back to the lender and that they are usually the only bidder.
A piece of property near me sold not long ago at a sheriff's sale after foreclosure, the guy who bought it got it direct from the bank. He had actually made a deal with the bank to buy the property before the sale, but on legal advice let it go thru the sale to settle all/some of the title issues(or at least that is the way he explained it to me).

There's a lot of shady, almost legal stuff that goes on at those sales. For example, back in the early 80's my grandmother sold a house on land contract to buyer Adam. A couple years later, a man named Charlie contacted her and told her he was sorry, but could no longer make the tax payments and the house was going up on a Sheriff's sale. She asked who the heck he was? Turns out Adam forged her name and sold the house to Bob who forged her name again and sold the house to Charlie. Something weird happened in there and some how it got on a Sheriff's sale for back taxes under Adam's name. Anyhow, my dad got a lawyer, went to the tax sale and watched who bought the house back. It was Adam... who also happened to be a local police officer. As soon as the sale completed, dad and the lawyer approached Adam, told them they knew what he was up to and offered him a "deal". Grandma got her money back.

 

[dooleysm]

So you guys think that the bank will be there ready to bid about what they are owed on the mortgage? Seems like a terrible deal for them, but maybe it's just a bunch of people following their policy.

I tried to deal with them to avoid the whole foreclosure mess, but they were completely unwilling to deal on it. They kept telling me that they don't own it yet so there's nothing they could do. I know the other side of the story and I know that the house will go through foreclosure. It seemed to me that they would jump at the chance to avoid foreclosure. I don't know what that costs, but I do know it takes time, and they are losing out on interest every month that trailer sits there.

I guess I can check at the courthouse to make sure there are no other liens on the property and then I'll get a HELOC and show up to the sheriff's sale and see what happens.

 

[jdbower]

You can also talk to a realtor or lawyer about making a "short sale". Essentially if the house is worth $50 and the mortgage is for $65 sometimes the bank will take an offer of $50 and write off the $15 loss. This helps them because they'd probably get about $50 at auction anyway and they don't need to go through a foreclosure. Unfortunately the banks are pretty obtuse about streamlining this process so it takes several months and there's no guarantee they won't reject even a fair offer. I have no idea how to navigate this system without the help of a properly trained realtor or lawyer - both of whom cost money. Perhaps if the property is listed as for sale by owner you can get to talk to the bank yourself (assuming your state doesn't require an attorney for sale).

 

[Duffster]

....They kept telling me that they don't own it yet so there's nothing they could do.....

That is because they don't own it until they buy it at the Sheriffs sale.

 

[tallyho8]

If the mortgage is $100,000 on a piece of foreclosed property that is auctioned off, the bank will usually bid $100,000 for it because it doesn't cost them one cent more to bid $100,000 on it then it costs them to bid $100 on it because they get the property and the money back that they bid on it.

Then when they have clear title, they can do what they want with the property, fix it up, sell it at auction etc. and probably get more for it then they would if they let someone else buy it at the sheriff's auction.

 

[MossRoad]

I tried to deal with them to avoid the whole foreclosure mess, but they were completely unwilling to deal on it. They kept telling me that they don't own it yet so there's nothing they could do. I know the other side of the story and I know that the house will go through foreclosure. It seemed to me that they would jump at the chance to avoid foreclosure. I don't know what that costs, but I do know it takes time, and they are losing out on interest every month that trailer sits there.

I guess I can check at the courthouse to make sure there are no other liens on the property and then I'll get a HELOC and show up to the sheriff's sale and see what happens.

Think of it this way... Lets say the mortgage was for ten thousand and the owner has paid of seven thousand. The bank buys it back for three thousand and turns around and sells it for seven thousand. They made their interest plus four thousand more. Why would they want to sell it to you for three thousand?

 

[2manyrocks]

That's possible, but the more likely situation is that the bank has loaned more than the property is worth. If there is a lot of equity in a property, the borrower is normally going to sell it to try to get their equity out. The properties that usually get foreclosed are the ones that are unsaleable because there is too much debt for first and second mortgages.

Some bankers automatically bid what they are owed and then some will bid what they think they think they can actually net out of the property by the time they bid it in, pay the attorney, pay off back taxes, clean it up, fix it up, and pay a realtor's fee to resell it. You can't tell what is going to happen until the bidding is over at the sale.

A foreclosure sale is more risky than a straight up purchase because the buyer isn't getting warranties of title. If there is a goof or a fraud in the chain of title, good luck with that. So anybody who is interested in buying at a foreclosure sale needs to get their own title search.

For that reason, some wait for the bank to take title, and then insist on the bank giving a warranty deed so there's somebody to go against if the title is messed up.

 

[dmccarty]

Reading some of the comments jiggled a memory. The lawyers we talked too regarding buying a property that was about to be foreclosed where very adamant about waiting for the foreclosure to complete. I can't remember why at this point but I suppose it was title issues. But liens were a concern as well.

We talked with the county employees about the property. They were very helpful. One lien holder file a lien well after the time period to do so had past. We knew the time frame because we were very familiar with the particulars of the property. A county employee told my wife that a day after my wife had been talking with her about the property, a guy came in and file a lien. The employee told her this when my wife went back to check to see if a lien had been filed.

Get thee to a couple of local lawyers and start asking questions.

Later,
Dan

 

[Champy]

I'd recommend letting the bank buy it back themselves first. This allows all liens to be cleared, AND most importantly, they absorb any depreciation that has occurred between the original morgage value and current market value.

If it is a foreclosure, there's probably not much equity and given todays real estate markets it was probably bought/financed during "high" times. Evaluate similar property sales for comparisions and determine a true value for the property regardless of foreclosures.......what would it sell for under normal conditions is where you should be bidding.

After the bank/mortgage company buys it back at the Sheriff's sale, I'd present their rep with a written offer to purchase at your estimated value (or less if you want to negotiate). They don't want property on their books, so your offer is always attractive.

BTW - here is a link to the Indiana Code on such stuff. Property Tax sales are covered under Chapter 24, not sure about foreclosure sales...

Indiana Code TITLE 6, Article 1.1 Table of Contents

Here is a link to SRI, and company that handles Sheriffs sales for many counties in Indiana.....

SRI Inc. Sheriff's Sale System

 

[MossRoad]

There is a double-wide trailer on 2 acres adjoining my land that I know has been abandoned. I know the woman that owns it (for the time being) and I know how much she owes on it. She is willing to sell it to me for what she owes. However, this is more than I am willing to spend and I believe it is more than it is worth.

I called the bank that has the mortgage on it and they are unwilling to deal with me on it until after the property has gone through foreclosure and through a sheriff's sale.

After thinking about this for a while, I have to ask why would you expect the lady to sell you the place for less than she has in it? And why would you think its O.K. to go to the bank and poke into her financial affairs and then get kind of upset that the bank won't deal with you?

 

[dooleysm]

I have no expectation that she would sell the place for less than she has in it, I never asked her to do that because I knew she wouldn't accept that kind of offer. The way the economy is right now, many folks are facing having to sell properties for less than they have in them. Instead, most are going the same route as this lady, foreclosure.

My BIL works with her and asked her about the property for me. She told him what she owed on it, that she had been to the bank and told them she wasn't going to pay anything else on it, they froze her accounts, and that she would sell it to me for what she owes. My father went to the courthouse and looked up which bank she had her mortgage through and what amount her mortgage was. That is public information, available for anyone to see.

I believe that the 10 year old double wide, with significant shingle damage since last September, and completely neglected and abandoned for the past 6 months or so is not worth what she owes on it. Nowhere near that in fact. It's possible that it's worth more to someone else than it is to me, but probably not by much.

In general, I think that bank's (not just the bank I've been trying to deal with, but the banking system in general) unwillingness to deal with their debtors is a big reason we're in this mess. The bank is going to take a hit on this property, no two ways about it. I was offering to help them get this property off their books right now; as opposed to going through foreclosure, paying their lawyer, going to the sheriff's sale, paying a realtor, paying for fixes, and carrying this debt for the next X number of months. I feel like it was a bad decision on their part to not deal with me. I was bringing cash to the table and willing to make what I felt was an attractive offer to them.

If you feel like I've done something shady or underhanded, that's you opinion. I certainly don't feel that I have.

 

[2manyrocks]

In general, I think that bank's (not just the bank I've been trying to deal with, but the banking system in general) unwillingness to deal with their debtors is a big reason we're in this mess.

If the banks were to write down mortgage balances for everyone whose house is worth less than the outstanding mortgage balance, where would the write downs end?

If banks write down mortgages for customers who quit paying their mortgages, what are the customers who make their payments going to say? If anything, looks like they'd want to reward the customers who actually pay their bills.

 

[MossRoad]

If you feel like I've done something shady or underhanded, that's you opinion. I certainly don't feel that I have.

Nope. Not shady or underhanded at all, as you said, its all public information.

 

[Duffster]

The bank isn't going to short sell it out from under the owner

The owner can ask the bank to accept less than full repayment and then it would be the owners problem to figure out how to pay the balance but with taxes and other possible leans this still isnt a good option

It is my understanding that when purchased at a Sherrifs sale that has a clear title (this obviously varies state to state) that is part of the reason why the bank has to wait for the sale