Okay, here's another question I get a lot. Buyers spend tons of time researching what a house sold for at sheriff's auction, what was owed on it when the owner lost it in a foreclosure, what they paid etc.
If it's a bank owned property NONE of this matters.
Seriously.
Please trust me. LOL
If I owed three million dollars on a house to my lender and they foreclosed on my house and three disinterested third party appraisers or agents told the bank it was worth $100,000 guess what the bank would list it at? Yep, $100,000.
It doesn't matter what was owed. It matters what it's worth right now in today's market.
Also, when a house goes to sheriff's sale, in my county at least (Butler county Ohio), they start the bidding at 2/3 of the appraised value. Appraised value is a loose term because the appraiser drives by, hardly ever goes inside and give it their best educated guess at value. So say the house's appraised value is $90,000. The bidding starts at $60,000. Many an excited buyer has shown up thinking they will buy this house for $60,000. Chances are it ain't gonna happen!
Here's why. The bank will go and bid on the house because they have to in order to collect on the mortgage insurance on the property and get back part of their loss. They have a certain amount they have to bid to, even if it makes no sense to the rest of the world.
I have been outbid at sheriff's sale on a property by the lender only to buy it for less than I bid from the same lender a couple months later. There is a formula, and just like credit scoring we average Joes are not meant to completely understand.
But that's how it works.
So if a bank bought the property back at sheriff's sale for $85,000 that doesn't mean they will sell it for that. They may end up listing it for $100,000. Just because no one offered more at sheriff's sale doesn't mean they won't offer more later.
At sheriff's sale you're buying sight unseen on the interior usually- you don't get to go in and inspect the house (which scares all buyers except for investors) and you also have to put a big chunk of cash down, which you usually don't have to do if you buy it after it's listed. Sheriff sale purchases are not for the faint hearted (they're a gamble- sometimes the inside is great and sometimes you get a poop filled basement like I have before).
REOs (foreclosures) allow for time to think and look and ponder- sheriff sales don't. Although the lender won't usually do repairs, they allow for inspection. Sheriff sales don't. REOs allow for an appraiser to get in and check the house out so you can get a loan. Sheriff sales don't necessarily.
