7 Replies

Here is my list:

  1. The amount owed to the party that is foreclosing.
  2. The actual current market value of the property (what someone would pay for the house today)
  3. The motivation of the note holder.

You can arrange that list how ever you like.

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Inspect the house, determine how much work there is to be done and at what cost, determine if there are any hidden costs associated with the auction, transfer tax, electronic fees, etc. the type of deed you are going to receive, and now you can determine what price the upper limits of your bid should be. Don't get swept up in the excitement of the moment, remember the acquisition price is a major part of the profit picture. What title company can/must you use. Food for thought.

Since you are in PA, we are probably talking about sheriff sales - please post a correction to that if my assumption is not what you are looking to do.

In all sheriff sales, the single most important thing is lien seniority / position of the foreclosing plaintiff. Now, in Phila, there are sheriff sales for mortgage foreclosures and for tax sales; I believe that they are held on different days in Phila to reduce confusion, but I could be wrong as I'm not going to any sheriff sales in Phila - in the suburbs the sheriff sales will have both mortgage foreclosures and municipal lien foreclosures on the same day. There is also a website that Phila has where you can sign up to get further free training on the city's sheriff sales. The point I am trying to make is that in PA the rules for mortgage foreclosures tend to be somewhat different from the rules on tax sales at the sheriff sale. In PA, former owners of mortgage foreclosures have no redemption rights once the foreclosure completes by being sold at sheriff sale; but tax sales might have redemption rights that could impact how soon you can exit the deal. IRS redemption rights might also come in either a mortgage foreclosure or tax sale if there was an IRS lien.

So really lots to learn - much of which is brought up in the links within that FAQ I posted.

The lender typically either starts the bidding at what's owed or at a reasonable price. In either case, you have no control over this, so knowing what they're owed is irrelevant.

What's more important is to figure out what its worth to you. A title search is essential to figuring out what's in front of the foreclosing lien, if anything. Anything in front of the foreclosing lien has to be subtracted off your maximum bid. Then getting a look at the condition is necessary. If possible, try to get a look inside. If its listed, get a showing. If its vacant, peek in the windows. At the very least look at the outside. And you need to know if the owners are still there. If they are, you make have to evict them, and that adds to your cost. Finally, you have to figure out how to pay. Many sheriff sales are cash on the barrelhead. Some counties here give you a few hours to run to the bank. Others want the money as soon as the gavel falls. No money, they continue the auction.

So, if the lenders opening bid is above what you will pay, just don't bid. You still have a shot to buy it as a REO.

My answer to your question was in regard to internet auctions not municipal, county tax salel auctions as they are a whole different bag'. Tax sales are not free and clear of liens, the Judicial Sales are free and clear of all liens, as well as properties that can be purchased at the repository. Sorry for jumping to a conclusion and overlooking Sheriff and tax sales.