This weekend’s open thread touched on one example of a bank bidding nearly 25% less than what it was owed for a foreclosed home at the courthouse auction.
Well, our good friend Jillayne Schlicke over at Rain City Guide actually attended a foreclosure auction a week ago, and wrote up an interesting post on this new phenomenon: Why are Banks Setting the Opening Auction Bid Below The Principal Balance?
I attended a foreclosure auction in Bellevue, WA last week to discover if the rumor was true that banks are opening their bids below the amount owed. I received confirmation from three professional investors that yes, the banks have been doing that, it’s no secret, and there seems to be no discernable pattern. It’s not one particular bank or lender, it’s not particular types of property or in any specific area. It appears to be random.
Only a few of the trustee sales attracted bidders, and the rest were deeded back to the bank. Out of the 92 active sales, 25 had opening bids below the amount owed to the bank.
Jillayne has also uploaded a series of videos she took at the foreclosure auction to her YouTube page.
Interesting stuff. Anybody have any theories on this? Does this open the door to possibly getting a good deal at a courthouse foreclosure auction?