"Auctioned off on the courthouse steps....."
When a lender forecloses on a property, after posting it in the classifieds of the local paper for 3 weeks, same day each week....on the 4th week...it is "auctioned off on the courthouse steps".
WHETHER OR NOT THE HOUSE IS OCCUPIED!
By the time the property is up for auction on the courthouse steps, the bank has already determined a minimum amount of money that it will accept based on a series of Broker Price Opinions done by at least 2 or more real estate agents. (these are the reports that I do - my "drive by shootings")
An agent will do a "drive by", take at least one picture of the front of the house, one of the house numbers for verification of address, and one or two street scenes (showing surroundings). Along with that is a report, that when printed out is anywhere from 3-8 pages, sometimes more depending on the requesting mortgage company.
Included in this report is ....a property condition report, area marketing conditions (not the city or community but specific area of the property (usually the multiple listing service designated market area of the property obtained through the local real estate board), 3 comparable sold properties within the last 160 days, unless the lender specifically requests 90 days or less, and 3 comparable currently listed properties. These properties must meet certain criteria....proximity(usually less than 1 mile), gross living area (within 20%), style(ranch, 2 story, etc), age(within 5 years), lot size, and comparable value based on condition, upgrades, updated. Based on this information, a price (market value) is determined for 30 day "quick sale", 90, 120-180 day sales. It is also based on "as is" and "as repaired".
The lender, based on these BPO's, combined with the amount owed on the loan....determines what the minimum dollar amount that they will accept in a bid on the courthouse steps.
When a property goes on the "auction block" on the courthouse steps....ANYONE...EVEN THE CURRENT OWNER ....MAY PURCHASE THE HOUSE.....provided....it at least meets the minimum amount the bank requires and beats out the other bids. BUT....the new buyer MUST pay for it within 24 hours in cash paper money. It is almost impossible to use a loan to purchase property on the courthouse steps unless you have a great relationship with a bank or a line of credit.
The property is purchased "as is - where is" and the new buyer MUST pay any back property taxes, liens, homeowner association dues, etc owed on the property.
IF no one purchases the property on the courthouse steps....the bank/lender "buys" it back. Which means the bank/lender takes back the property ...but also pays any monies owed on the property.
The bank/lender then assigns the property to a real estate agent that has is an "approved" agent with the bank/lender or a 3rd party loan servicing company which manages foreclosed properties for the lender/bank. This is how I get foreclosed properties.
It is then the agent's job to "babysit" the property. The first step is to determine occupancy status.
Then, if occupied by the owner, or renter....I offer them $1000 to vacate the property within 14 days, "broom clean" and all possession removed from the property. If they are willing, they will sign a contract with me, I inspect the property-inside and out, the bank/lender or their managing company, will send me a check to give to the occupant provided that when I go on the 14th day, the house is clean, everything is gone and no further damage has been done to the property. I make notes if need be, on first inspection of current damage to compare with any subsequent damage on final inspection. I give them the check, I have a locksmith accompany me, and he changes the locks at that time. I take extensive pictures of the property, send in a comparative market analysis of the property and wait for the bank/lender to determine a price to then list it in the multiple listing service. This price is usually much lower than what the minimum bid was on the courthouse steps.
If the property is occupied and the occupant refuses to move out when I offer them the money. I then report back to the management company that the occupant refuses to leave. It then falls back in the foreclosing attorney's office for a court date for a court ordered eviction. Once it goes to court, the court will order eviction in 30 days, unless the home owner( or their representative, usually an attorney) requests and is granted a "stay of eviction". If a "stay" is granted, it is for a specific number of days, usually between 15 and 30. This can be granted as often as a judge is willing to grant it.
On the 30th day...or whatever date the court decides....if the occupants have not vacated the property....I then go to the house accompanied by a county sheriff's officer, a locksmith and an eviction crew. The sheriff officer (in my case - there are 2 that work together that go with me, both are armed, but not in uniform) gives the writ of eviction to the homeowner, the homeowner is escorted out, the locksmith changes the locks, and the crew proceeds to box/bag and carry out all possessions in the house and put them at the curb. I have only had to do this once ....quite frankly it seriously sucked.
I then proceed the same as if it was already vacated. Sometimes I will get a property that is already vacant, the homeowners have just walked away. Sometimes they take everything and leave it broom clean....other times it can be utterly disgusting.
Filing for bankruptcy....as long as the filing is done and recorded prior to the day of the courthouse steps auction .....can immediately stop the property from going on the auction block.
Depending on the type of bankruptcy filed....determines what happens with a house. I cannot tell you what happens as the are several different procedures and from what I understand....these days, in many, cases it's up to the judge.
I do know that both Florida and Texas have homestead laws, where if one files bankruptcy, the primary home is protected. Not any rental properties or second homes, only primary residence.
There is also something called a "short sale". That is where a homeowner is in arrears on the mortgage or the house is no longer worth the loan amount....and the homeowner has an offer on the property for considerably less than owed and the bank/lender agrees to accept the offered amount and agrees to allow the sale of the property. Depending on the bank/lender....the homeowner may or may not have to repay the difference.
Interior BPO's are done on these properties along with at least one "drive by" by a different agent, to determine a fair market price on the property based on the interior/exterior condition and current market valuation of the property. I did one of these today. The homeowner purchased the property for $105K 3 years ago as new construction...it was never worth that...and still isn't. A loan for that amount should never have been made. I haven't done the BPO on it, but I'm guessing it's going to come out somewhere in the $80K range. What's hurting it tremendously, are the surroundings.....close to interstate, highly commercial, much smaller, 50+yr old houses.
