Foreclosure Auction...bank shows up....!

Question

I'm going to a mortgage auction for the first time this week. Minimum bid posted is $100k (which I'm guessing is probably the 1st mortgage).

Bank rep shows up...takes the bid at $100k (their interest).

Question - is it common that once bids starts to pick up...bank will stay out of the bidding as their interest is met by another bidder?

Example...bid now is at $110k (bank's already got their amount covered)..would bank rep stay out of further bidding..so bidding is between other investors? I would venture to guess yes as their is no reason for the bank to continue bidding...even though the bank knows the property is worth lets say...$160k.

How does that work? Does anyone have any experiences bidding against the bank??

Answer 1

So, once the bank's amount is taken care of (including all fees for foreclosure) then it will stop bidding. Now, if that bank has a first and a second on the home, then it will not stop until both debts are covered.

The minimum bid is not always the 1st mortgage. If you want to get on a foreclosure website, that will tell you when the last primary mortgage was applied for on the property, and what the amount was. Just because similar homes sell for 150,000, that doesn't mean that the person that bought the home didn't finance it for more.  

Answer 2

Banks will drive the bid price higher if they think the property is being sold too cheaply at the auction.  They don't necessarily stop their bidding at the amount of the mortgage balance.  Do remember that they have spent considerable thousands bringing the property to the foreclosure status in the first place.  They will try to recover those expenses as well, and sometimes more.

Answer 3

Bank will bid how much they have in it.  In this case, 100k.

Ususally, the scenerio is the oposite of what you describe.  The house is WORTH 100k, and the bank has 120k into it.  That's why so few houses get bought at the courthouse steps.  The bank bids what's owed, nobody else bids.  The bank lists it with a Realtor and sells it for what it's worth, and loses some money in the deal - that's why they're bending over backwards to NOT foreclose.  

Answer 4

Banks generally don't want to be in the business of owning real property.  Once its debt is covered, the bank is likely to stop bidding.

Answer 5

I have never see a bank show up at all. Their bid is a "sealed bid" which is prepared in advance.  If someone will pay them $1 more, they are happy.  THe problem is that the banks have been adding 14 months of back payment, 13 late fees, and $20,000 in attorney's fees to their bid. Well, i won't pay that.  I'm doing better waiting for the house to get listed and sit on the market for 30 days.  Then i can get it for my price and i even get to inspect it.  /