Here is how the Sheriffs auction went for me - Posted by Brian, WI

Real Estate Investing Auctions
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Posted by JT-IN on April 16, 2002 at 11:14:12:

Hey JohnBoy:

First things first… Missed you at the convention this year…

Secondly… I will need to talk to you concerning some folks whose house that I am trying to buy, (preforeclosure), that are moving back to Chicago… (Park Ridge area), and will undoubtedly need some owner financing. Should be house-hunting about June.

Thirdly… “Two guys heavy into foreclosures”. Was that a personal attack…? LOL I am a bit too heavy, and definitely into foreclosures! LOL

Anyway, to the crux of the matter. Yes, this would be driven by state law, and I leave open the fact that it could work either way, but the way that I understand this in WI is that there is a 14 day period for the owner to redeem his property… so with that in mind, here is what the experienced WI foreclosure investor/expert advised:

“He also suggested I try to get the deed by offering the current “owner” $5000 to help him get a “new start”. At that point I would then pay what the bank just bought the property for($78,000) and may even be responsible for the back taxes.”

I think that there is a tremendous lack of understanding on Brians part here, or his interpretation of such… I do not believe that this would work quite this way. (Caveat: I know little about WI laws).

Getting the deed from the owner would serve no purpose, if you are buying directly from the bank, so I am convinced after re-reading this, that the investors advice is referring to a redemption, and would reinstate all the mtgs, and any liens, as if the sale did not occur. In fact, even post sale in the State of Ohio, where I play ball most, when a redemption occurs, the suit eventually shows as dismissed, and the results of the sale expunged; all mtgs and liens will survive in tact.

The other advice Brian rec’d, was to wait until day 15, then pursue the bank with an informed offer. I am definitely in this camp, since a redemption would equate to overpaying for the property. The only other window of opportunity, (which expired yesterday), was the actual Sheriff Sale on Monday. Any accepted bid here, over and above the bank would have wiped out the mtg, and given clear title; (assuming that the atty did their jobs correctly), for a presumably lower price than the mtg itself. However, we will never know what the bank would have done, if Brian would have bid, following the bank. Strictly theory now…

To your last question… about the defaulting borrower showing up at the foreclosure sale, and buying the property for less. Not a problem, if they have the cash. In fact, I have bid against these idiots, where there was a large federal tax lien (440K), that would have been released, if the IRS did not exercise their recission rights. When I realized who was bidding, I then just bid this sucker up to help good Ole Uncle Sam get some of their money back… Went to 210K, on a house that was worth 210K. There was no doubt that they were buying no matter what the price. The mtgs and taxes equated to about 140K, so teh gov’t got back about 70K of their 440K, that this slimeball stiffed us on… Anyway, way off point here, but the owner can bid on their property, just like anyone else; in fact with passion… and these folks were passionately MAD as hell, at JT that day… LOL

Just the way that I view things…

JT-IN

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Here is how the Sheriffs auction went for me - Posted by Brian, WI

Posted by Brian, WI on April 15, 2002 at 17:33:53:

I started a post on 04/13/02 about bidding Monday morning at the Sheriffs auction. Thanks again for all those that responded.

Here is a post as part of that string I thought I’d bring up here.

The gist of this was…

4 family at sheriffs sale
court records show owner owes $118,000
banks attorney said their opening bid would be $78,000
rents are about $1650/month
assessed at $84,5000

Now my post from below:

Well the banks attorney was the only bidder, and it was for the $78,000.

I got a card from that attorney and will contact her to get as much information as I can from her. One thing she did say is that because this is a BankOne property, I can’t work through the attorney, I would need a realtor to make the offer.

The back taxes are about $9,000 and I found out the property is assessed at $84,500, but again the previous owner from about 2 1/2 years ago said he was getting about $1650/month in total rents.

My next step is to contact the above attorney and get as much information as possible, contact the city tax department to see if the bank now is responsible for the back taxes, then get a Real estate agent and put in a offer. A friend who is an agent(real job is fireman), was at the auction too. He said go to the bank and offer about $5000 more then the $78,000 they bid and I should get it. I said, how about $5000 less, but no more then the $78,000.

Anyway I want to buy this property if I can get it for about the $78,000, I may back out if I have to pay the back taxes of $9,000, but it would still be a good cash flow deal.

Time to check the archives to see what others have suggested in this type of situation.

Man, I love this board, and this country!!!

Brian,WI

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I To Applaud Your Agressiveness… - Posted by phil fernandez

Posted by phil fernandez on April 15, 2002 at 19:07:23:

… but do find out if your state has a redemption period and for how long the redemption period runs. And do yourself a favor. If you plan on going after foreclosuers, get Joe Kaiser’s, " Dominate Your Foreclosure Marketplace ". It can be ordered from this site.

I’ve got the course and believe me the information in it can not be found in any other place that I’m aware of.

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Hey Brian . . . - Posted by JoeKaiser

Posted by JoeKaiser on April 15, 2002 at 18:45:14:

I’ve mentioned this three times now. Your first move is to determine whether or not there is a redemption period in WI. That’s the only thing that matters here.

Would someone from WI please advise?

In most states, the sheriff’s sale is virtually a non event. If that holds true in WI, then you’re wasting your time dealing with the bank or its attorney.

Find out if there’s a redemption period and if so, go get a deed from the owner (not the bank). From there, I’d order title and see what else is going on.

I’d also set things up to make sure the rents are both being paid and don’t get squandered away by someone who isn’t receiving them.

In my town, no one would bid at the sale, except the lender who receives a “sheriff’s certificate.” After eight months or a year, depending on whether or not a deficiency judgment is awarded, if the property is not redeemed the successful bidder is awarded an actual “sheriff’s deed.”

So, I’d watch that property go to sale, I’d hustle over to the owner and get a deed, I’d order title to see if there is a better play her, and I’d visit the tenants to make sure there are no problems I need to attend to, the rents are up to date and from here on out, sent directly to me.

I applaud your efforts, but it seems to me that you’ve already decided your next move. Those of us with experience can already tell that it’s the wrong move.

Step One . . . tell me about the redemption rights.

Joe

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Re: I To Applaud Your Agressiveness… - Posted by Dan

Posted by Dan on October 04, 2003 at 12:08:47:

Phil,

I read your post regarding Joe’s program and I absolutley agree that it is a must have if you are going to do foreclosures. That takes me to my next question … do you do foreclosures? And are you in WI? My wife and I have been “students” of REI for almost 2 years and we are now ready to get into the game. We feel like foreclosures is good place to start and would love to touch base with others who are also doing FC.

Hope this goes through considering it was started over a year ago.

Dan

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Redemption period - Posted by Brian, WI

Posted by Brian, WI on April 16, 2002 at 01:49:34:

First Joe I can’t thank you enough the way you keep pushing me to find out more(educate myself), you are a master!

I just got home from a local RE investment club meeting and was able to pick the brain of one of the guys there. He has done pretty much nothing other then foreclosures(a lot of them!) and here is what he told me…

The sale was today, Monday April 15, 2002.
The Owner(who still lives there) has 14 days then the property becomes the high bidders(in this case the banks)
On day 15 I should start to snoop around(get in the basement to check the electric, have a roofer check the flat roof, etc)

If possible still on day 15, or as soon there after put in an all cash offer to the bank. He suggested $40,000(you can only go up) and see what happens.
He also suggested I try to get the deed by offering the current “owner” $5000 to help him get a “new start”. At that point I would then pay what the bank just bought the property for($78,000) and may even be responsible for the back taxes.

From all that, I think I’ll give it 14 days for the bank to get the property back, have them pay the back taxes and any more that come due, then offer them through a RE agent a “starting” offer of maybe $40,000 and see what happens.

Not sure if I’m on the right track as you would suggest Joe, and sorry if I’m not, and again thanks for any and all of your advice. This may be just a “one time thing” as far as a foreclosure goes, but who knows, I may get the “bug” if this works out and that will be an avenue for RE investing. (oh great, that’s all I need, another avenue for RE investing. I already own rooming houses, I’ve started to get into “Lonnie Deals” with mobile homes, got a “subject-to” course, I’m in the middle of a 1033 (not a 1031) exchange, and am even thinking about buying my dream house (log home on a lake) as an investment property, until it’s time to “retire”. AAAAAAAAAAAAHHHHHHHHHHHHHH help me :):):slight_smile:

Brian,WI

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Redemption in WI - Posted by Tim

Posted by Tim on April 15, 2002 at 20:17:59:

According to my book, Wisconsin does NOT have a redemption period. The borrower has until the sale date to cure the default.

Hope this helps!

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Caution about getting this deed… - Posted by JT-IN

Posted by JT-IN on April 16, 2002 at 07:57:39:

Brian:

You had mentioned this strategy:
“He also suggested I try to get the deed by offering the current “owner” $5000 to help him get a “new start”. At that point I would then pay what the bank just bought the property for($78,000) and may even be responsible for the back taxes.”

So, this sounds a lot like a redemption of the owners rights. What will happen here is that all the mortgages and any liens, may come back to the property, as if the sheriff sale had never occured. Obviously, this will not work, so be extra careful here.

My advice to you in this deal, since you are unsure of how to proceed, is to only consider buying this property from the bank, and NO other way. Should you proceed in the other manner suggested, and make a mistake, it will be too late once you realize your error, to rectify the problem. This is precisely why it is recommended by just about all experienced forelosure folks, that those NOT completely knowledgable with the mechanics, should observe from afar… and that would be by dealing with the Bank!

Best of luck to you on this deal… Keep in mind, it is one deal, of many out there. If you get it from the Bank, for a great price, Super! If not, then NEXT…

Just the way that I view things…

JT-IN

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Re: Caution about getting this deed… - Posted by JohnBoy

Posted by JohnBoy on April 16, 2002 at 10:21:37:

If I’m reading your post right, then there seems to be a conflict in opinions about something.

The borrower actually owes about $118k. The lender opened the bid for $78k.

No one bid so the property went back to the bank.

So if someone got the deed and were able to redeem within a certain number of days, what would be the redemption amount that has to be paid?

Would it be the $78k the lender opened the bidding at?

Or would the lender be able to hold out for the full $118k which is the actual amount the borrower owed on the debt?

From reading your post it appears as if you’re saying it would be the full amount as if the sale never happened.

Joe mentioned below it would be the $78k that was the bid amount?

Two guys heavy into foreclosures that seem to have a difference of opinions on this. Could this depend on state laws where this may apply differently in other states?

I’m no expert in this field, but it seems to be that it would only make sense that the lender be entitled to the full amount that was owed and not just the $78k they bid at the sale. Otherwise everyone could let their homes be foreclosed on and then redeem them for a lesser amount than what they owed on it. On the other hand I’ve heard that a borrower could show up at the sale buy their property back for a lesser amount than what they owed if they had the cash to do it with.

Can you guys help to clear this up better?