What to Expect the Day of the Sheriff Sale
/So it’s the day of the sale. We’ve double checked everything. Now all there is to do is show up. There’s always a slight chance it could be postponed, but not likely. We felt pretty confident given the situation of the foreclosure that no one was going to pay off debt from the estate, so no reason to be postponed or cancelled- right? It’s the morning of the sale and I continue to check the listing to make sure it is active. So far so good. We get to the sheriff sale and start to look around at the people there. We are trying to get a read of who was there for what. In chatting with some people, we notice a couple sales had just been postponed.
Sales can literally be postponed or cancelled seconds before the auction takes place. Wonderful. I check nervously, and our property was one of the ones that was postponed. I instantly think it’s because of the weather. I had wished for it to snow so we would be the only ones to bid on it, now it backfired on me. I thought the snow had caused travel issues for the representatives of the property.
Not the case. So apparently one of the big reasons a sale can be postponed is the bank and or attorneys of the property did not disclose the bid requirement to the representatives at the sale. Therefore, if the rep doesn’t know the acceptable amount, they can’t auction off the property. As a result, it gets postponed until the next sheriff sale which is scheduled out for 100 days.
Being optimistic, I thought maybe we should stay in case the bid requirement was magically submitted while the sale was going on. And if nothing else we would at least get an understanding of how the sale works before we come back again in May.
So we stayed and watched 17 auctions take place in the course of an hour. Way quicker process than what I was expecting. Out of the 17 auctions only about 4 properties actually sold. The rest of the properties were purchased back by the bank. So when the bank buys the property back, they will typically try to sell it on the market through a realtor to recoup some of their money. We learned through speaking with attorneys though, that if you were interested in one of those properties it is best to learn what bank rep is handling the case. You have roughly 30 days from the time the auction takes place to the time the bank lists the property that you may be able to settle with the bank on a price. Often times this is favorable for the bank because they don’t have to pay realtor fees or the cost to maintain the property.
So the bidding will start off with an opening bid from the person representing the property. The opening bid is essentially the amount of money spent on advertising, paperwork, and fees to get the property to the sheriff sale. The banks holding the liens will typically work with local attorneys or other representatives to represent them at the auction. The attorney or representative is given a minimum amount they will accept. There is no wiggle room since the attorney or representative is not employed by the bank, they are simply working on their behalf. If you were interested in a property, people typically asked the attorney or representative the amount they needed to receive. There is no point bidding in $100 dollar increments if the acceptable bid amount is more than what you are willing to pay. Not to mention if you are bidding against the bank and decide to back out at a certain amount, the bank now has to buy the property back for that amount. So it is essentially another lien against the property. And banks don’t like to do that. So it’s better to find out what their minimum is before you start bidding the number up.
It may sound obvious, but you also want to make sure you do your research PRIOR to the sale. We watched a guy bid $50,000 for a property only to find out that was the second lien on the property. The property was at the sale to try and collect money on the second lien, the first lien was actually going to be at the next sheriff sale. So a way to prevent this from happening is either pay someone to do a title search of the property, or check out the recorders and registers office as well as the tax office to see what outstanding debt could possibly be on the property. Personally, if you don’t know what you are looking for, I would pay someone to do the title search for you. Paying a couple hundred dollars is far better than making a $50,000 mistake.
Lastly, we learned that the amount listed on the docket sheet is the debt owed at the time of the judgement. We couldn’t figure out why some minimum bids were greater than what was listed. If the property accrued more debt since the time of the judgement that would cause the minimum bid to increase. Again, this is where you need to do your research before the sale so you have an up to date value of what is owed on the property. Typically banks want to get the principle owed on the property at the sheriff sale.
Despite our property sale getting postponed until May 1, it was helpful to see the sheriff sale process in action. We were able to ask questions once it was over to get a better understanding of everything. Everything happens for a reason. With the sale being postponed it gives us more time to continue to put money aside for renovation costs, and allows us to get the shop fully up and running. So maybe it was a good thing. The spring will be a great time to start working on the property and a great time to sell our current home. So fingers crossed (again) that everything comes together for us in the spring.
