House in foreclosure question?

Question

I have recently found a very nice home that is in the last stage of foreclosure. It is estimated to be about a $250,000 home that was built in 2005. It is currently owned by the bank and the starting bid is listed at $500. My state tax assessment website lists that the property was bought in April for $37,463 on the same day it went into foreclosure. So is that the amount the bank needs for it? and why is the starting bid only $500. This is very confusing...any light you can shed on this is greatly appreciated.

Answer 1

At the foreclosure auction,  the bank puts in a bid that usually covers what it is owed.  Usually a funny amount like $37,463 because it includes the last unpaid mortgage payments plus late charges.  Once the auction takes place, the bank owns the house.  Someone could have bought it at the auction but there are 2 problems:   you must pay cash to buy it at auction.... and .... on  a $250,000 house the $37,000 was a 2nd mortgage.  So the winning bidder has to immediately pay off the 1st mortgage.  No one wants to do that.

That's why no one else bid to buy this house for $38,000 at the auction.

The big auction houses like REDC and  Hudson and Marshall start the bidding at $500.  At their last auction, 3,000 people showed up to bid on 400 houses.  Guess how many sold for $500?  None.  The cheapest sold for $90,000.  

Answer 2

If it sounds too good to be true, it is.

A "foreclosure site" doesn't dictate what the auction is going to bring.  I guarantee that alot more than $500 or $37,463 is what the property will bring down the gavel for.  

When foreclosure sale information was harder to come by, I'm sure some places sold cheap.   But since the info is available on the internet, it isn't happening now.

Answer 3

Sounds like the house foreclosed for that amount, since it is listed as the owner, and the foreclosure amount was the $37K.

The bank is probably now selling by auction, if there is a starting bid. They are trying to see what they can get for it.

Answer 4

That does sound strange....contact your Commission of Revenue Department or whatever department your tax assessment office is in and inquire about it.... and see if you can get an explanation for it.  Somehow, it sounds like you might end up with a bit of a problem if you purchase it.  OR the tax assessment office may have put the purchase information in the wrong file...so that $37,463 may not even pertain to this house....the data entry people at the tax offices make mistakes, too.  I just don't see how it could be sold and forclosed on....on the very same day...must be an error of some sort.  Good Luck