Buy before an auction???

18 Replies

Absolutely, one of the basic targets for buying. Expect them not to get really serious until a couple days before the auction, when their “miracle” to keep the property doesn’t work out.

@Wayne Brooks But, if the bank has the property already listed up for an auction date, how do I go about putting in an offer and them taking it off the auction block? I’ve bought properties at auction but I want to submit offer before auction for some some properties i’m interested in.

I thought once it went to auction there is no way to submit an offer to the bank or listing agent. Could you possibly explain the process to me I would appreciate it a lot.

If its listed in the MLS then there is usually information on how to make a pre-acution offer, or at least how to contact the listing agent and auctioneer to inquire. If its not listed on MLS then I suggest reaching out directly to the auctioneer, or the owner if you can get that information.

Make sure to check local laws. Some states have insane laws making it a crime to try to buy properties that are in foreclosure or might be in foreclosure in the future and the penalty is up to 3x the value of the property.

@Angie Williams it depends on the auction format and site. I was bidding on a property in philly from auction.com last week, and a Realitor also had it listed way above the starting bid price. I actually contacted the Realitor and viewed the property prior to bidding on it. I did bid on the property but didn’t win. But anyways just do a little research on the local MLS of the market you’re using, and see if it’s listed. Hope that’s helpful

@Joe Nagle so your saying if I see it as an auction still look for it as a foreclosure sale on other sites. Basically it possibly being sold by the agent and set for auction. Interesting!

Btw where is Philly do you invest? I have invested on the outskirts of the city for about 2 years, recently sold my last property. It’s a whole different world out there compared to NY, but I sure learned a lot, saw a whole lot and had a love hate relationship with it. But over all loved it more and miss it. Thinking about heading back very soon.

@Angie Williams are you referring to foreclosure auctions at the courthouse and/or by the Sheriff? Or those that are listed on Auction.com, etc. If it's the former, you can try and reach out to the foreclosure attorney or the servicer on the mortgage to discuss an offer situation. If it's a property with equity, the lender will most likely want the full payoff (UPB + arrears + legal fees, etc), and if it's underwater they'll likely want the FMV of the property. The lender may or may not entertain an offer - if it's a large bank, then it's slim to nil.

@Angie Williams I have personally sold a few in Philly that were headed to either Tax Sale or Sheriff Sale. A key factor is being able to close before the sale, and showing that the property was sold and money has been collecting for owed water bill, gas bill, property tax, etc. 

@Angie Williams When a bank takes a property to auction it is usually a foreclosure auction. Until the foreclosure auction happens the  owner still owns the property and has the exclusive right to sell.  They also have the right to pay off the bank even as late as the morning of the auction. 

At the foreclosure auction banks normally bid the amount they are owed. If no one else bids the bank buys it. They don't actually pay anything for it because they bid the amount they are owed. 

If the bank buys it at the foreclosure auction, they can resell it however they wish. Usually they will list it but they can choose to auction it. 

So in the first scenario you are buying from the owner and the sale has to happen and the bank paid before the foreclosure auction. In the second scenario you are buying it from the bank. It is whatever you can negotiate with the bank. 

If someone else bids higher than the bank. the bank never owns it. It goes from the old owner to the high auction bidder. If the bid goes higher than the amount owed, the extra amount goes to the previous owner who lost the house.

Now yes you can buy prior to an auction if the buyer accepts your offer. Some won't consider an offer before an auction. I sell a fair amount of properties at auction and I am always willing to consider a pre-auction offer. 

I have never bought nor sold via an online auction. Whether an online auction company accept pre-auction offers may be subject to their own rules regardless of what the buyer wants.

Originally posted by @Angie Williams :

Joe Nagle so your saying if I see it as an auction still look for it as a foreclosure sale on other sites. Basically it possibly being sold by the agent and set for auction. Interesting!

Btw where is Philly do you invest? I have invested on the outskirts of the city for about 2 years, recently sold my last property. It’s a whole different world out there compared to NY, but I sure learned a lot, saw a whole lot and had a love hate relationship with it. But over all loved it more and miss it. Thinking about heading back very soon.

 I actually got a place off an auction site, and was able to get a home inspection and view the property prior to making my bid

@Ned Carey that is a great explanation of the foreclosure auction process. 

I would add that if possible you should talk to the bank/mortgage holder and let them know your interest in the property before the sale.  If nothing else, they should remember your interest and you might get a chance to buy it from them after the foreclosure.  Banks want to loan money, not own real estate!

Originally posted by @David Torbert :

@Ned Carey that is a great explanation of the foreclosure auction process. 

I would add that if possible you should talk to the bank/mortgage holder and let them know your interest in the property before the sale.  If nothing else, they should remember your interest and you might get a chance to buy it from them after the foreclosure.  Banks want to loan money, not own real estate!

While all of that is great in theory, it doesn't exist for the most part. They don't care about your interest before sale and, you won't be able to talk to them to let them know of your interest before sale and, you won't get a chance to buy it from them after foreclosure unless you have your agent call the number on the front lawn, and make an offer, while it's listed on MLS.