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how are starting bids determined for forclosures?

  • March 03 2014 - Ocean City
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Answers (4)

As far as the auctions go the deposit is typically 10% of the amount owed to the bank.  Typically the bank will buy the unit back in to sell at a later date before they let it go for less than that.  On occasion they will let it sell for less than owed but there is no way of telling when this will happen.  Once it is bought back by the bank it is possible that they will sell it for less.  None of this is written in stone.  Hope this helps.
  • November 13 2014
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Although I technically do not disagree with your answers so far, in our area, the first foreclosure auction many times the reserve placed by the lender is the amount of the mortgage. If they only get lower bids, typically they do not sell, and place the asset in their own portfolio for sale at a future date.
You will find, I think, various standards in differing parts of the country in terms of how the auctions are handled.
I hope this helps!

Best wishes, Jim
  • March 04 2014
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To directly answer your question, most banks hire a local, third party real estate agent or appraisal service to give them an as-is value on the property (including comparable properties, photos, etc.).  With this information, the bank has an employ generally called an "asset manager" who then determines their asking price for the property based on the cumulative information mentioned above.

Hope this helps!

John Newman
  • March 03 2014
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The best chance for making a successful bid on a foreclosure is to have your agent run a Comparative Market Analysis.  This will help you understand the market value of homes in the area, I guarantee you that the bank has evaluated the home and they know the value.  Once you have that info, visit the home and assess the condition.  If it needs work you can adjust your offer to compensate for the repairs.  If you are financing make sure you have your pre-approval letter/form showing your ability to close the transaction.  Offer a fair amount of Earnest Money and you will have a good chance of getting the bid and the contract.
  • March 03 2014
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