First priority during forclosures/auctions?

10 Replies

Hi BP,

I think I heard this on a podcast a while ago or something- But is it true that at foreclosures/ and or auctions people that will be living in the home have first dibs on the property? If I am somewhere in the ballpark on that can someone explain? Thank you.

A slight nuance - I've won a couple auctions (Auction.com) but before I closed, the owners brokered a deal with the bank and my closing was cancelled. There are also some investors that are very good about identifying properties auctioned at a price higher than the bank note(s).  They know how to contact the owner, arrange for the owner to settle with the bank, then buy the house from the owner. All before the action winner closes.  Then they contact the auction winner, offer to sell at the auction price (maybe lower, maybe higher) and walk away with the difference.  Something I wish I knew how to do.

@Terrell Garren I really appreciate your input. I am actually new here and came across this  post and had a few questions for you in regards to using (auction.com). Would I have to be pre-approved for a loan before I show up to one of these live auctions or do most buyers use a cashiers check or etc. I may have my information wrong as I am fairly new to all of this. Also, do a lot of buyers show up to most of these auctions?

@Michael Osorio Glad to share my experiences Michael. Auction.com processes vary from state. In NC, you need to have a certified check for 5% of bid at the initial auction (courthouse steps) and to outbid others during the outbid window (10 days). If you win the final bid, the legal firm handling the sale will start bugging you to close asap. I doubt they will wait longer than 30 days so have you finances in order or you will lose your deposit. Generally 3 to 5 bidders show up in my county. It’s a bad day when the hedge fund reps show up as their initial bid will be 95% of market value. They leave no meat on the bone. I’ve found auction.com very good to do business with.

@Michael Osorio

Here in Allegheny County in PA, you have to have 10% of the full amount of your winning bid on you in cash or cashier's checks on the day of the sale, which is always Monday. You have to bring the other 90% to the county courthouse in cash or cashier's checks by that Friday. If you don't pay in full by Friday, the sheriff keeps your 10% and re-exposes the house to auction the next month.

Bank-owned foreclosures or courthouse auctions?  I bought my first flip on the courthouse steps.  In my area, there is a small window of time where the bank only accepts owner-occupied offers/bids...then later on to investors.  Courthouse auctions- it doesn't matter.  Just remember to file notice of intent to sell as soon as you get title!