Appreciate an explanation of REO auction

qmarkerAugust 3, 2012

I am curious how this works. I live in a new condo and I'm retired and happy here but there is a condo in another building that was foreclosed by the bank at a courthouse auction which I went to see again out of curiosity. The bank had a real estate company listing it for sale. Of course the price just kept dwindling and now I've heard it is up for auction. I don't want to buy it but I am just curious about a couple of things.

It says no minimum opening bid but there is a selling price. How does that work, does the first bid have to top the current listing price?

Is there a date that the auction is actually held or how does the winner get declared?

If there is an ending date to the auction, how could I find out when that is?

Is it a public auction if bids are supposed to be input at bid com on the web or is everything just private?

I would appreciate any input. I have time now to just look and learn and I find it interesting after recently having no problem selling my home and learning a little about real estate. Very little, that is.

I thank you !!

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brickeyee

"Of course the price just kept dwindling and now I've heard it is up for auction.

cal the bank or RE company ad ask tem what the bidding rules are.

If it is REO the bank can set any rules they want.

The rules for the courthouse auction are usually at least partially restricted/set by the deed (for trust deed states) or the court (for judicial foreclosures).

    Bookmark   August 4, 2012 at 3:39PM
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RooseveltL

Maybe this can help -
There are a few types of auction and need to figure out which stage this property is in -
REO auction #1 - the bank foreclosed on OwnerA for x amount. The bank has taken care of liens, etc. etc. and simply wants to sell all rights to the property for X+Y so they simply wish to recoup their loan & foreclosure cost.
NOTE - In the past this was less than the property value so it was a deal however, now with upside-down mortgage this gets tricky which explains why their market value keeps decreasing as the person defining price is probably 20 states away.
REO Auction #2 - it has been listed with an agent for a while (so bank owns property) and wants to stop the bleeding. So they sell it in a general auction allowing people to bid on it competitively. This attracts more investors/flippers and hope they can get x - #%? This won't happen unless the property has been sitting for a while.
Next step, they will find a different RE agent or relist under different conditions.

How to tell the difference? Find your local paper which list the Court or Public Notices and if you find/see the property Auction #1 will show Wells F vs. Owner A in the amount of $X which is a legal notice. However, Auction #2 will show has a general auction sell with multiple listings and offerings in the same ad.

    Bookmark   August 6, 2012 at 9:49AM
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brickeyee

"REO auction #1 - the bank foreclosed on OwnerA for x amount. "

That is a foreclsure auction.

The bank ends up owning (if they bid ad win0 and it is then REO, real Estate Owned.

the lender has already foreclosed

"a condo in another building that was foreclosed by the bank at a courthouse auction" so it is REO.

the RE agent or the bank can tell you the rules they have in place.

It often takes a large certified check to even participate.

$20,00 and up depending on the anticipated sale price and value of the property.

If you default after the auction (cannot meet the auction terms for financing, etc) the money goes to the bank.

    Bookmark   August 6, 2012 at 4:47PM
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