Sheriff Sale Auctioneer "Recalled" Auction After I Won Property!

26 Replies

Earlier this week I attended a Sheriff Sale. There were three properties up for sale, one of which was cancelled. I was the only bidder present in the room when the auction started (the Plaintiff's attorney was also present in the room). Note: the auction was scheduled at 1:00PM and the auctioneer started the auction at 1:01PM.

The property that I wanted to bid on was up second (after the listing that was cancelled). The opening bid was $40,000. I bid $1 over and the auctioneer announced that I was the winner ("going once, twice, sold"). The auctioneer then requested my cashier's check and moved on to the third property. Once the auction for the third property concluded (there were no bidders), the auctioneer requested my ID and contact information. About 3-4 minutes later (around 1:10 pm), while I was still writing my contact information (I needed to write it twice (the attorney also needed the information)) another individual walked into the room and indicated that he was interested in the property that I won. Surprisingly, the auctioneer asked the Plaintiff's attorney if she wanted to "recall the listing." I was stunned! The Plaintiff's attorney asked that the new bidder be given an opportunity to bid on the property that I won. She essentially voided my transaction and started the auction process over. Ultimately, I was the highest bidder, but at $51,000 (as opposed to $40,001).

Do I have any potential claims against the Plaintiff's attorney? It appears that we had a contract that the Plaintiff's attorney breached.

Wow, I have attended hundreds of sheriff sales (in Indiana) and I have never seen what you described. I have seen properties cancelled after the sale because of a miscommunication or last minute bankruptcy filing. But I have never seen a property sold to a third party, then un-sold to reopen bidding. 

You might want to see if the county has written rules for how the sale is to be conducted. 

Against the attorney, no. The attorney/bank weren’t really part of the Procedure.....it’s the sheriff’s office. I would have raised objections before the “re do” though. Never heard of such a thing.....tough to fight local customs though.

Thanks.  I did raise an objection (Several actually).  She claimed that it was up to the Plaintiff's attorney to recall the bid and that she has been doing this for 30 years.  

Yes in all my years I have not seen that.. I have seen cryers stall.. ie they get a phone call and stall and then 5 minutes later someone comes in and qualifies funds for that sale and then they start.

but I have in all my days never seen what you described.. but you know IL  pretty funky with the rules there It does not shock me..

anecdotally  I can recall on a many occasion were my competition was 2 minutes late and the sale was all done and they could not bid because I won the bid and it was over .. Never could figure out why folks would go to all the trouble to chase these deals down.. go get their cashiers checks and then simply could not be to the sale on time... and especially in our market were competition is dog tough and not that many deals go 3p anymore..  lucky to have 10 in a whole week in a 2 plus million metro..  

That is messed up. I would review the local rules & follow up with a complaint to the courts.

If the deposit had not been paid and accepted, and the paperwork had not been 100% completed and signed, I don't see how this was improper. In my experience, auctioneers have a lot of leeway. When the auctioneer announces the terms of sale (which would have been recorded, and which terms would have dictated in the event of any conflict with the written or advertised terms), presumably he/she said something like "The decision of the Auctioneer will be final." Sorry to the high bidder (who was bidding against nobody -- hardly an auction) but it sounds like the decision here was to re-open the bid and get more money for the plaintiff.

@Tom Gimer . . .  I handed the auctioneer my certified check and ID.  She only returned the items back to me after she "recall the auction" (over my objections). 

Originally posted by @Henry Fidel :

@Tom Gimer . . .  I handed the auctioneer my certified check and ID.  She only returned the items back to me after she "recall the auction" (over my objections). 

So no signed docs.

You participated in the bidding thereafter? You are on record offering a higher bid, correct?

I certainly see why you would be upset but I don't envision there being a legal avenue for changing the outcome.

The bank could have set a higher reserve or bid against you. Why would an on time auction be recalled for another individual bidder?...friends with the auctioneer? Bizarre.

Never seen it here in Pittsburgh. I have seen a bank bidding against a buyer on a mortgage foreclosure, seen the buyer go over the bank's max bid, and then seen the bank acting as the plaintiff stop the sale and request to postpone the sale to another date, voiding the bidding up to that point and returning the property to its opening bid the next time it's exposed for sale, with the bank as plaintiff paying the postponement and advertising fees.

This happens when a bank owns first and second mortgages on a property, and it's the first mortgage that has forced the foreclosure sale, and the judgment for the first mortgage was a pittance while the second mortgage is for serious money. If the bank lets the bidding buyer have the house, the second lien is wiped off the books.

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This will be clearer with an example. Let's say Joseph and his blushing bride Tina get a mortgage for $300,000 and buy a very nice house in a nice part of town in 1997. By 2007, they only owe $141,000 on the original mortgage. But the house has appreciated significantly and now appraises at $620,000. Tina and Joseph go back to the same bank and get a home equity loan for $360,000 to buy a turnkey rental property in Jacksonville run by an extremely reputable management company that provides a steady $200 in cashflow a month, great passive investment with excellent appreciation potential, just like the BP community told her.

For the next five years they continue to pay off the original mortgage and the home equity loan, and by 2013 they owe $70,000 on the original mortgage and $305,000 on the home equity loan. Joseph loses his "good" job and ends up in the slam in 2014 because he went that stupid, stupid house with wine coolers and condoms to meet an underage boy he found online. There was no boy, but all these guys with cameras ran out of the bushes...

Tina hangs on, hoping against hope that the story Joseph told her about just being curious and wanting to "counsel the boy at a difficult time in his life" isn't the biggest self-loathing cockamamie lie she's ever heard in her life. But alack, alas, Tina was never particularly good with money and "forgot" to pay the original mortgage while consistently paying off the (higher) payment for the home equity loan. When Joseph finds out about this, distraught, she shrugs and snaps, "Well, isn't it all going to the same bank anyway? If you didn't want us in this situation, why did you buy those condoms, Joseph? WHY DID YOU DO THIS TO YOUR KIDS, JOSEPH?"

The house goes to auction.

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Rather than overbid well above the amount of the judgment that led to this foreclosure, the lawyers will just start the process over again and hope that the bidder will find another property to spend their money on in the interim and won't be in the auction room next month to try to get a cheap deal on a $730,000 house, allowing the bank to acquire Joseph and Tina's house for minimal additional cost to their exposure from both the mortgage and the home equity loan.

Thanks for the detailed example. I was just going to go with what a friend of mine is wont to say over the last year: "Skulduggery, boooooy."

Account Closed Next time I want to use a "sample city", i'll be sure to use Pittsburgh, PA. lol

Originally posted by @Marian Smith :

The bank could have set a higher reserve or bid against you. Why would an on time auction be recalled for another individual bidder?...friends with the auctioneer? Bizarre.

I've been involved with many auctions and have seen bidding re-opened. Most of the time it is because another interested party says "Whoa... I didn't get my bid in." Guess who makes more money when the bid increases.

perfect example of the golden rule

Those with the gold make the rules

 Complete bs but nothing to do 

In NC, anyone can outbid the highest bidder within ten days, then the ten days starts over. So, a auction could continue for a while if someone places a higher bid every nine days. They don't need to be present to participate. 

JP 

@Tom Gimer   if the bid increase it goes to the owner of the property or next in line if their are junior liens bank cant keep anymore than what they are owed..

Originally posted by @JP Hill :

In NC, anyone can outbid the highest bidder within ten days, then the ten days starts over. So, a auction could continue for a while if someone places a higher bid every nine days. They don't need to be present to participate. 

JP 

 and for that reason I never got started in buying foreclosures in that state.. not sure how many upset bids are put in but it seem like a lot of start and stop. if it went for a screaming deal I can see upset bids all the time.

@Jay Hinrichs Where I'm from when the hammer price increases, the auctioneer earns more money.

Originally posted by @Tom Gimer :

@Jay Hinrichs Where I'm from when the hammer price increases, the auctioneer earns more money.

 well it can't be much right... foreclosure fee's are usually set price .. but then again like we talk about its all regional.

out our way you have a minimum wage or a little bit higher person doing this for the trustee. 

Originally posted by @Jay Hinrichs :
Originally posted by @Tom Gimer:

@Jay Hinrichs Where I'm from when the hammer price increases, the auctioneer earns more money.

 well it can't be much right... foreclosure fee's are usually set price .. but then again like we talk about its all regional.

out our way you have a minimum wage or a little bit higher person doing this for the trustee. 

Certainly interesting to hear the regional differences!

But since you mentioned trustees... they would also benefit from a higher hammer price. [around here anyway]

Everybody involved with that auction other than OP had an interest in that bid increasing...

@Tom Gimer   I don't think we are thinking the same thing when it comes to trustee.

the trustee in a Deed of trust has the power of sale.. it can be anyone.. lawyer  company , you me.

and beneficiary hires them to sell the property.. I have foreclosed as a bene many many times. its a set fee that these trustee services charge.. does not matter what the property sells for. So no motivation on their part to encourage increased bidding.

@Jay Hinrichs Average fee paid to trustee in this region in connection with a foreclosure sale is 3-5% of the sale price. The FNMA deed of trust (Section 22) has a blank before the % that gets filled in:

Trustee shall apply the proceeds of the sale in the following order: (a) to all expenses of the sale, including, but not limited to, Trustee’s fees of ____________% of the gross sale price and reasonable attorneys’ fees; (b) to all sums secured by this Security Instrument; and (c) any excess to the person or persons legally entitled to it. 

@Tom Gimer   wow they must have done very well for themselves through the crisis.

with our foreclsoures averaging 300 to 500k per that would be 10 to 15k just in auction fee's 

we pay 2,500 to 4,000 total.. and its added to opening bid.. no commish on top

@Jay Hinrichs Just signed off on a title commitment where the prior transfer was a foreclosure in Virginia... 10% of $462,000 to the auctioneer. 

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