can a family member bid on your home at a sheriffs auction and if successful, then sell it or rent it back to the former owner?

Asked by Julia DR, 45069 Fri Jun 22, 2012

Ive heard conflicting information regarding this. I just read an article online that says a family member or even the owner can bid on their own property. this does not make sense... wouldn't the bank not allow b/c the owner is in defaut? again tho, can a family member bid and purchase their relatives property at a sheriff's auction? any real estate attorneys out there know for sure?

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James Gordon…, Agent, Hamilton, OH
Sat Jun 23, 2012
No problem with this. The bank will bid up to the judgement amount though. If a family member was going to buy the property it is just as easy to buy it before the execution of judgement.The bank does not care who buys the property as long as they get their full judgement.
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to clarify some issues about why not just bring it current, etc: the opening bid on the property is $70000 less than the current mortgage amount owed. the appraised value by the sheriffs ofc is 50% of the amount owed by the current owner in default. also the mortgage first went behind when husband/wife separated almost 3 yrs ago.Three payments were missed, then there were tenants that actually made payments for about 9 months then bank started sending back payments b/c foreclosure started..tenants lived there another 9 months/no payment. then husband/owner moved in/out, had various tenants none of which paid. property became vacant, in bad disrepair. no payment made for about 20 months. Now wife (owner), who has paid rent elsewhere since 2009, has cleaned up &repaired, moved in & been trying to work w/ bank on loan modif, husband agrees to wife living there,but only his name on loan; bank wont discuss w wife. Wife may have family member willing to cash assist w purchs. taxes are paid
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GTOptions, , Indian Beach, NC
Fri Jun 22, 2012
Why the owner of the house is going to bid on his own property! If he's got the cash then why the property is being mortgaged. And I don't think that any law would permit the family member to bid.
Web Reference:  http://www.gtoptions.com/
0 votes
Dan Tabit, Agent, Issaquah, WA
Fri Jun 22, 2012
Anastasia,
If the current owner can bring the mortgage current, there is no need for it to go to sheriffs auction. Auctions are cash only, hard money loans can be arranged in advance, but only for qualified buyers. If you are in default, I doubt you would be able to secure any financing.
As far as a family member bidding, I don't think they will care as long as the funds are good. A short sale requires the buyer to be "at arm’s length" meaning no relationship to the seller. This is to avoid fraud cases where a family member bids low and other offers are not presented to the lender for consideration.
If you are going to lose your home to foreclosure, don't rely on information here or other websites. You need specific information to your circumstances. Time is critical, so meet with an attorney who does real estate work. You may benefit from a Bankruptcy which could keep you in the house for a long time, a short sale or a deed in lieu of foreclosure. Only an attorney with information about your entire situation can advise if one of these may be best for you.
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