Posted by Bill K. - - FL on December 23, 1999 at 21:43:36:
I am assuming you’re in a mortgage state.These are attorneys representing the foreclosing mortagage lenders who have gotten a judgement amount against the owners for non payment. The judgement or sale amount includes the unpaid mortgage balance,accrued interest,real estate taxes, city liens, attorneys fees etc. That amount gets paid first and many times there isn’t much if any equity left. So they are not buying the property for those prices. Attorneys are not stupid. Some are astute investors. Be very careful on these sales to research the title before you buy. You might be buying a second mortgage and not know it. (I know a dentist who thought he bought a 100K house for 30K. It was a second mtg. There was a first of 60K.)
I’m an experienced investor but a newbie at sheriff’s sales. I recently started attending them and actually bought one property successfully but there is one situation that occurs at these sales that I just can’t figure out exactly. Why will these attorneys buy these props at such high prices? It cost me a probable deal today and I need to know why. It is quite obvious that they are going to buy certain properties no matter what the cost. Any help out there??? Larry
The attorneys are bidding the full judgment debt so they can acquire the properties for the lenders. The lenders will, in turn, convey the properties to loan guarantee/insurance agencies who guaranteed the mortgage debt. In order to get paid, they must be able to transfer the property to the agency. They don’t care how much the paper judgment is versus how much the property is really worth. It’s the loan guarantor who has the problem of actually selling the property and recouping what it has paid out. That’s why you have HUD, VA, Fannie Mae etc… all selling property.
The only bargains at sheriff sales usually come from conventional loans, where there is no loan guaranty agency and the holder of the mortgage is also the ultimate creditor. These folks often take a more realistic approach to bidding at sheriff sales. They like to unload the properties there if they can.