Question about foreclosure auctions in Baltimore County

7 Replies

I'm looking for some insight. I went to an auction to observe yesterday. One house I was interested in was bid high by the lender. His bid was clearly at the ARV level even though the home was in foreclosure and needed work. What is the reason?

@Ruth Lyons this is the banks last chance to recoup losses if there is another party interested in bidding.

In our market we often see the house listed 10-30% below what the upset (bank) bid was. Takes a few months though.

Thanks for your answer Percy. So are you saying that the bank will hold onto it for a few months and then it'll be back up for auction? What's the reasoning? Is it an accounting thing for the bank? Or will they fix it up and try to sell in on the MLS? They are paying taxes and other costs for it to be sitting there so it seems like they're signing up for more costs.

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@Ruth Lyons Don't try to apply logic to it, just assume that's what they'll usually do... Actually there is a good reason. A lot of times that mortgage is insured by HUD, Fannie Mae or another government agency. They bid in at the amount they are owed and then turn it over to the government and collect the insurance. That makes a bit more sense doesn't it? 99% of the foreclosed houses in my market sell for more than an investor would pay so I look for the 1% and then watch the others when they show up after foreclosure.

@Jeff Kehl @Ruth Lyons

Jeff is correct. As a veteran of over 75 Court House step auction purchases you come to accept that the only reason to attend is to bid on the one that is let go for the low debt on the property. Most all others are government insured loans and are bought back in for the enormous debt by federal law. Some local Banks will also let them go so as to not be stuck with the property. In Baltimore County these days, the bidding has become so aggresive that I have stopped attending. Lots of money chasing few properties.

Thanks Jeff, Rich and Percy. I so appreciate your insight! I am noticing that properties are more expensive and the pickings are slimmer than in January when I bought my last one. 

I am not interested in buying at the market high which it seems we're getting close to (or are already at) in Baltimore County. 

Interesting, thanks for sharing. Just so I understand, your contact is referring to Baltimore County, or nationally as a bank policy (I see you're in Orlando).