I live in Tulsa, OK and we have a rule that 1) I don't understand the purpose of and 2) has kept me away from Sheriff's Auctions for foreclosures. I recently heard about a twist to it that I hope someone who has dealt with this before can help me understand.
Before the auction, a Sheriff's Deputy goes out with 3 appraisers and they guesstimate each properties value. The minimum opening bid can be no less than 2/3 of that appraised value. So if the bank is owed $25,000 on the mortgage and is foreclosing on it, but the appraisal came in at $100,000, the minimum bid is $66,666. Why? What is the point of this?
Now...same scenario....the bank does not want to bid that much because they would have to cut a check to the property owner for the over payment of $41,666 since the minimum bid is $66,666. Of course if someone overbids them, they are ecstatic because they don't want the house bank and could care less at this point because they get their $25,000 back and can move on.
BUT....assuming the bank does not bid and no one else wants to bid....does it just stay with the bank? Does it go up for auction again next month? What happens if there are no bids?
I recently heard about a concept called NO BID/NO SALE. Under this scenario, in theory, a bank could declare no bid, no sale and then the Sheriff handling the auction would simply open the bid to anyone on the floor for any amount. If an investor bid $10,000, then it is assumed the bank would bid up to the $25,000 to protect their interest but hope someone outbids them. This obviously seems to be a work around to the minimum bid is 2/3 of appraised amount nonsense. Has anyone been to an Oklahoma Sheriffs auction and seen this used? Is this common?
There is a property I am interested in that pretty much fits this scenario and I am trying out how to buy it without paying 2/3 of the stupid appraised price. The house is in bad shape and the appraisal does not reflect this. For near loan payoff, there is a deal. For 2/3 their dumb appraised value...no way.
The appraised value at the Sheriff sale is frequently not an accurate representation of the value of the property. They are drive-by appraisals and frequently appear to be influenced by the judgement amount so I take the number with a (very small) grain of salt.
That being said, the property will not, under any circumstance, be sold for less than 2/3 of the appraised value. That is Oklahoma law.
The "No Bid / No Sale" occurs when the bank does not enter a bid and there are no other bidders willing to pay 2/3 of the appraised value. The property simply rolls to another auction to attempt the sale again.
I believe the plaintiff can petition for a new appraisal if they feel the appraised value is too high and preventing the property from selling.
Several years ago I spoke with a plaintiffs attorney regarding a property I was interested in and told them the appraised value was much too high for any investor to pay 2/3. It had no bid for a few auctions and then suddenly the court case showed the property was re-appraised for a lower amount. I then bid and purchased the property. I'm assuming the plaintiff (bank's attorney) had asked for a new appraisal to be conducted.
If you have additional specific questions regarding the process, the best source of information is the sheriff's office civil desk (918-596-5684, [email protected]) or to ask the plaintiff's attorney directly. I have found both to usually be very friendly and willing to answer questions regarding the process.
Thanks for the info Nate. That echo's what I understood. I will follow up with the attorney that mentioned the No Bid/No Sale option and see what part of his statement I misunderstood....if any. May just have to wait for the appraisals to work their way down. The bank has petitioned successfully to have the appraisal lowered 3 times so far. It will sell eventually I guess.
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