Auction Terminology

9 Replies

I'm in Northampton County, PA. I've been to a few Sheriff's Sales here and I am trying to get a handle on whats being said. Majority of the properties being auctioned are bank foreclosures. The banks reps will always say something like "$1 plus costs max bid $65k." If costs are $4500 does that mean their opening bid is $4501 or are they stating that there is no point in anybody else bidding unless its over $65k? I'm new be gentle.

Welcome to BP. @Steve Babiak may know this since he is in PA and has posted about sheriff sales... The trustees operate differently here in NC. 

i've heard that the repo auctions are pretty much a waste of time to attend...the bank is going to take it.  If you have one you are interested in you can go early and talk to the bank rep.  Theyll tell you how high they will bid it up.....which i believe is the amount of the note.  I guess it might make sense if there is a small 1st loan with a large second......

Originally posted by @Carlton Taylor :

I'm in Northampton County, PA. I've been to a few Sheriff's Sales here and I am trying to get a handle on whats being said. Majority of the properties being auctioned are bank foreclosures. The banks reps will always say something like "$1 plus costs max bid $65k." If costs are $4500 does that mean their opening bid is $4501 or are they stating that there is no point in anybody else bidding unless its over $65k? I'm new be gentle.

Yes and yes to both parts of that question. The minimum bid that the sheriff will allow is costs - the cost of conducting the sheriff sale for that property (basically) because the sheriff gets paid first :)

But you can bid in the next bid increment that the sheriff will allow; that would be previous high bid plus $500 in my county. Then you will find out if the attorney is on the ball and ready to out-bid you; you'd be surprised that some attorneys are there and are unfamiliar that they must still enter a higher bid. One time I sat next to an attorney who almost did not out-bid somebody; I nudged him and said you better out-bid any bidder or else that bidder gets a cheap property. I didn't want that property, but I also didn't want that other bidder to make a killing either :). If the attorney makes another bid to out-bid somebody who is underbidding the so-called max bid, then the buyers should just stop bidding unless they are going over that max bid. All too often there are schmucks who waste lots of everybody's time by getting into a bidding war with the bank's attorney with no intention of topping the bank's max bid. 

Now, the reason the banks don't just bid their max bid up front is due to something called poundage; basically, poundage is a percentage of the high bid that gets paid to the sheriff, sort of a commission paid to the sheriff for conducting the sale. Every extra dollar paid out is another dollar the bank loses, so they want to get the property back at lowest possible bid. 

And in some places, rather than saying "max bid" the attorney might say "upset price ".  Both mean the same thing. 

Thanks for this explanation @Steve Babiak . I was doing  search on Auction terminology in PA & this was very helpful.

@Chad Urbshott Yes, exactly the same thing.  The winning bidder has to pay 0.7% doc stamps and a 1.5% fee to the clerk of court, so 2.2%.  So it makes sense to say "if you're not going to bid up to $123k, don't bother bidding".  It makes wonder why banks don't reveal their max bid for Every property.

@Wayne Brooks

That makes sense.  It never even occurred to me that the bank pays the same % fees on the highest bid, same as what a 3rd party bidder does.  I just foreclosed on a note  and set the max bid (in another state where it's required) fairly high and no one bid .  We just paid a flat fee to the county in this case since it automatically came back to us, since no one bid it up.  

Yes, it does make you wonder why the bank wouldn't post their max bid.  

@Chad Urbshott

Since we have sheriff sales in PA, the lender will have an attorney for representation. The day before the sale (late in the afternoon), some law firms will disclose the bids upon request. Not sure if you have something similar there in FL or not. 

@Steve Babiak

Most courthouse/foreclosure auctions in FL are hosted online nowadays, so generally all the data is posted on the hosts websites.  Sometimes, but very rarely, the lenders will disclose what their max bid is.  Not sure why, but it would make life much easier if they did!  

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