Plaintiff wins auction at sheriff sale
My question is:
Plaintiff ( the Bank) is allowed to bid the auction up.
Why is this legal?
At other auctions, (for example: contents of house) you would be asked to leave if bidding up your interests.
At the end of the sheriff sale, does the Bank, then, have to pay the 10% like anyone else?
Thank you!
House2house
I don't know if it's illegal, but the bank's have always had a representative or attorney bid higher for them. The bank's will try to get as much as possible for the property. If they don't feel like they are getting enough from the foreclosure auction, then they may bid on it themselves and it will become a bank REO.
For example, if the home is worth $200,000 and the balance owed is $190,000, then the bank will usually start the bidding price at say $145,000. If the highest bid is $150,000 and the bank doesn't feel comfortable with that amount, then they will outbid the highest bidder so that they can sell it themselves.
I hope this makes sense. I don't know if they really have to pay the county for at the auction, but they get the property back.
Tanya
It's not illegal, perhaps a quick primer on what the player positions are at the foreclosure sale is in order.
At the auction, the foreclosed owner still has the deed and therefore owns the property. The bank owns the mortgage and is foreclosing because the owner is not paying. At foreclosure the house is being sold to the highest bidder which will wipe out all liens except certain government liens, including the 1st mortgage which the bank owns. The proceeds will go first to the 1st lienholder(the bank) and then it's atty's, and finally to the remaining lienholders and any overage over that goes to the owner. Say a house is worth 100,000.00 The opening bid is 66,666.67 or 2/3 of the appraisal (Ohio). If the bank is only owed (has a 1st mortgage) 50,000.00 then they will not bid on the house because they are not investors or in the business of selling property. If however, they have a mortgage balance of 90,000.00 they have a choice. They can lose $23,333.33 and face their board and stockholders, or they can bid up to the amount that is owed to them, and thus become deeded owners of said property. Their thinking is, that they can do a better job (lose less money) by taking ownership of the property and selling it on their own or by using a broker. Banks are not in any way shape or form a form of competition for the investor, however they are going to be, in most cases, very aggressive in protecting their assets, and stockholders.
Good Luck,
Shawn(OH)
Here in AZ, the banks seem to be bidding higher than what they are owed! That doesn't seem fair for the investors at the auction.
I don't think that should be legal! Protecting their investment is one thing, but over bidding more than what they are owed is wrong in may opinion!
Kristy