Why would a lender(bank) want to outbid a potential buyer at a sheriff sale?

Question

Don't they get their money either way? Wouldn't they rather have someone buy the property than have to worry about selling it?

Answer 1

If the potential buyer's bid is lower than the money owed on the mortgage, the bank will try to outbid the potential buyer so it can put the house up for sale.

Answer 2

No because they dont want to take too big of a loss because its already cost alot for the repo. They will sell it for right around market value.

Answer 3

They ALWAYS put in a reserve bid.   They are not trying to outbid you, if you put in a serious bid they will not do anything to interfere with the auction.

They do not worry about selling property.    The values will go back up, if they have to sit on it for a year it will not really negatively effect them.

Answer 4

the right answer is that the bank cannot wright off the loss on a low bid, as in a higher one..  if 100k owed on the home,  they must bid full 100k, on the house. This allows them to go after the previous buyer for the loss.. If they sell the house after that, and I have bought a few from banks for less than owed, the prev owner is still liable for the losses, and will get a 1099 form from the bank. This is part and partial to banking law. Also the same for IRS law.

A bank will often sell below what they bid on the unit. Their bid cost them nothing, and might get them extra in return. I have had a bank contact me for sale of property that they got 150k less than they bid at sheriff's sale.

I've also had a bank refuse to sell me a house that was in foreclosure for the balanced owed, because they thought they could  get more money by listing it.. I went to the person who owed on the house and bought from them prior to court judgment.  Worked like a champ.

Answer 5

A lender is not going to allow a property on which it has $200,000 on an outstanding mortgage sell for $150,000 unless $150,000 is the actual current market value of the property.  If the property is worth considerably more than $150,000, the bank will continue to bid the price up until the sale price reaches one with which the bank is pleased.  If that doesn't happen, the bank will buy it back at the auction.

The bank will choose whichever course of action it thinks will bring it the greatest financial result.

Answer 6

Just clarify for everyone when a home enters into legal proceedings to foreclose on the house and regain possession they have a Sheriffs Sale.  If no one bids MORE than what is secured against the home then the bank takes possession and attempts to sell the property as described below.  In todays market it usually isn't a good idea to buy at sheriffs sale with-out extensive knowledge about real estate and law.  Usually people owe more than what their home is worth at a sheriffs sale so you would want to wait for the bank to buy it from themselves then they will lower the price to reflect market value.  

They wouldn't want to outbid a potential buyer at a sheriff sale.  They will put a bid in for what is secured against the home, for example if the prior borrower owed the bank $100,000 then that is the banks automatic bid.  If you bid less then you are being outbid but if you bid more they won't bid more than owed, unless they have another loan secured against the property that you are unaware of.  The Sheriff sale is also a legal preceeding which may, in some states, require the bank to bid whats owed.  

After the Sheriffs sale the lender will have an appraiser value the home and a real estate agent/broker do a BPO (Broker Price Opinion) the lender will try to sell the home based on these professionals opinions (market value) with the broker listing it like a normal house.

The lender isn't going to let you buy the house for any amount less than that until they can have people inspect the home and find out what it may sell for on the open market.  If they sold it to you for less, before the bidding then the prior borrower can sue them and create lots of legal problems for the bank/lender... The bank will try to collect the amount they didn't get when they try to sell it from the prior borrower.  If the bank doesn't make an effort to sell it for as much as possible then the prior owner can sue them.  The bank also has a duty to investors and account holders who gave the bank the money to loan, they want the house to sell for as much as possible to.  

There are some avenues to purchase a home prior to the sheriff sale AKA court house step sale/foreclosure sale.  There are also some avenues to purchase the home prior to the bank listing the property, after the sheriff sale.  don't have enough room to explain.

Answer 7

They are probably the lender for the SECOND mortgage.    

Answer 8

They would want to outbid a potential buyer to ensure they get what is owed to them for the mortgage.

No, they don't get their money either way.  They get it from the sale of the property (either through the sheriff sale or on the open market).

No, they want to get the money they are owed.  If someone owes $100,000 on a house the bank wants to make sure that the bidding goes up to at least $100,000 so they get the money owed to them.