Bid at Sheriff's Sale or negotiate with lender
If there is a property that is going to go cheap at the sheriff's sale, is it better to bid on the property there or negotiate with the lender afterwards? I assume that the bank is regulated by what the most they can sell the property for after they get it back. 
IMHO, I would have to say that it TOTALLY depends on the situation with the bank.
Is the loan value that the bank is trying to recover going to be close to market value? If so, you are best letting the bank buy it back (which they will generally always bid up the property to their mortgage balance or judgement of foreclosure balance) and negotiate with them later after they have obtained title to buy the property as an REO. Or, if you can get to the owner of the property, you might be able to short sale the property even AFTER the sheriff's sale depending on what the redemption period is for your state AND depending on whether there are other liens involved.
If the mortgage balance is relatively low in comparison to the value of the home, you have the option of bidding at the auction or once again, trying to strike a deal with the homeowner prior to the auction to buy the property (depending on the status of other liens). Since the mortgage company will usually stop bidding past their balance/judgement, it is an open market auction at that point, and you can generally control the property at a good price from the auction vs. trying to buy it from a real estate agent following the bank's possession.
I guess I can't really see a good reason to buy the property at auction. In my state, a homeowner typically has 6 months for redemption. The bank can't sell the property during that time, but they can sell the sheriff's certificate.
So, it seems to me the play is to always negotiate with the bank afterwards, assuming they win the auction. Then you have got some time to make a proper business deal, including getting your financing in place.
Hello Bowline,
Before going to the auction, you should have done your leg work. Also you should have your financing preapproved for the purchase.
Be aware that at some auctions there is a 10% add on fee after the winning the bid. If you remain within your margins for a successful winning bid then you can make large profits at public auctions. I a have purchase to properties at auctions.
Most Banks will attempt to sell the property at market value. As soon as they get the property, evict the (former) owner, and wait for the redemption period to elapse (if any - depends on the state), they will then order an appraisal, list the property, and try to squeeze every buck out of it. If you want a deal, you have to buy before or at the auction. The exception to the rule will be the dog with fleas - the property that no-one wants. Good luck !
Another reason to wait until after the sheriff's sale is that, assuming a cooperative (former) owner and a state that provides for post-Sheriff's sale redemption, you'll be able to inspect the property inside and out, kick the tires, and get a feel (though the owner can lie about its condition) for what you're buying. You can accomplish this before the sale too, if you want to get it before the Sheriff's sale. Way up here in northern MN, for example, pipes can freeze in the winter, and can cost thousands to repair. Some distressed homeowners just think "screw it, I'll just let it go rather than pay money I don't have to fix it" I might say "hmmm, I could fix that and still make money," and offer them a token amount for their Right of Redemption. Or I might use the info to decide it's not worth pursuing further, and thank them for their time. Sometimes homeowners let property go for reasons that aren't solely mortgage delinquency, and it's good to sniff those out rather than getting stuck with a money pit.
thomas
Let me get this straight...
There is a property that was on the market before foreclosure sale no takers
went to sale bank got it back
now on market w/ contract and they are taking back up offfers
so in florida the right of redemption I believe is 6 m.
Qusetion: from what I've gathered her The bank cannot transfer title until the 6 m are up?
You guys should all move to another state and do this....smile..up here in Washington state they get sold at trustee sales and lose the house that day......no 6 months crap. I have to only wait 20 days before I have to evict anyone that lives there also. I usually pay them 500 dollars or so if they move out quicker and do not damage the property on the way out. I also have a big semi truck that I will let them fill up thier belongings and stuff and help them move out if they are cooperative. I never have anyone destroy anything when I do that.....WOW I will stay out of those states with the 6 months deal....I need to sell these right away to keep my money working right for me....that sucks. hope all your deals are square ones....
Just to clarify the right of redemption in Florida. The only right of redemption is until the Clerk of the Circuit Court issues the Certificate of sale, which is usually the same day of the sale. For practical purposes, there is no right of redemption in Florida!
Just a further clarification on the redemption period in Florida. While it will end most of the time at the issuance of a certificate of sale (which is done the same day as the sale), the statute actually says redemption extends until the later of the certificate of sale OR the time specified in the judgment. The problem is that many judgments, including the form judgment approved by the Florida Supreme Court that many attorneys use, have been interpreted by the courts as extending the right of redemption until the certificate of title is issued. The certificate of title gets issued 10 days after the certificate of sale if the debtor has not made any proper objections to the sale. I think most attorneys have corrected this problem in the form judgments they use, but the old ones are still out there and it could still happen where you purchase the property at the sale and the debtor can still redeem for a short period until the certificate of title is issued.
In response to your post, can you tell me a little more about the "right of redemption" in Florida. A property in the state of Florida can legally go back to the original owner with due process and how?
Thank you!!!