If a house is going to be auctioned off on June 7, 2009, how do you determine the minimum bid on a property?

Asked by Shelley Betz, Watsonville, CA Thu Mar 26, 2009

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Molly Thomps…, Agent, Saratoga, CA
Tue Apr 27, 2010
All good answers! Banks set a minimum bid that will allow them to recoup what they can from any insurance (PMI) that may exist for that loan, then re-sell property later thru MLS or auctions at a lower price. IF you buy at the court house steps (as I have) you need cashiers checks for the whole amount of your bid immedialtely and you don't get Title insurance so you could then be responsible for other liens. You will frequesntly get a better deal after the Trustee sale thru MLS listings and you will get title insurance and be able to finance the purchase and inspect the property thoroughly.

Molly Thompson, Broker Assoc, APR
0 votes
Janet Grenin…, Agent, Soquel, CA
Fri Aug 14, 2009
Shelley - as you can see from these other answers, you won't be able to determine the minimum bid on a property, but you can determine the fair market value, to make sure you're not paying too much for the property.
Connect with a real estate agent and get the value, before going to the sale.
Janet Greninger
Coldwell Banker
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Glen Mitchell, Agent, Half Moon Bay, CA
Thu Mar 26, 2009
these days the second lender often does not foreclose because the value of the first loan is higher than the value of the home. The second lenders have already lost and don't want to lose more. The lender foreclosing knows the current approx value of the property and will not let the home go for less than they think they can sell it for including their costs. They don't want to be the successful bidder, but very often are.
Best of luck.

Glen Mitchell
0 votes
Curt Abramson, Agent, Santa Cruz, CA
Thu Mar 26, 2009
Shelley, Curt Abramson from Bailey Properties here. That's a good question. i'm going to assume you're speaking of a trustee's sale on a property under foreclosure. In that situation, typically a bank is trying to recover what they can from a loan they made to the homeowner. If there are first and second mortgages, usually the second mortgage holder is the one initiating the process, since they will lose all their money if the first mortgage forecloses.

Usually the price will be set by the lender, shortly before the sale, when they have all the costs and debts calculated and know what it will take to satisfy any senior liens and get the property free and clear. To win the bidding at a trustee's sale, you will not only need to outbid others including the lender, you need to be prepared to pay at the time with cashier's check.

I've heard that 98% of the time, the lender is the successful bidder at these sales, and is then free to market the property as an REO (Real Estate Owned, a bank term) on the MLS through a local agent. Most buyers find that to be the most effective time to make a bid on a property they're interested in.

Hope that answers your question. Good luck!
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Keith Manson-…, , Milwaukee, WI
Thu Mar 26, 2009
Don't work about your minium bid, figure out what your maxium bid will be. It depends how many people are after the same property. The bank will take care of the minium bid to start the action. If your asking how low can I get it, then that is a differnt question and will depend on the investor. So investors instruct the bank to bid full debt, some a percenatage of full debt. From my experience it is tied to value and usually no less than 70% of value unless you get lucky. Lucky would be the bank just lets it go and there are no other bidders. Make sure when you bid there are no other liens outstanding or you may have a big supprise and have a house subject to many other liens and share ownership. It is best to get a expert to help you if you are buying a property at auction, because lots can go wrong!
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