(800) 853-2651
SHOP NOW

Buying a farm at sherriffs sale

J

Josh in Pa

Member
About 10 years ago I farmed a small farm up the road, and then it sold to an investor for 300k. It had a livable house, decent barn, and a nice little equipment shed. Now, it has been sold several times, the shed has fallen down, there are small trees and heavy brush around the barn and house, and the windows are broken out, the doors have been kicked in. I saw yesterday it is listed to be sold at sherriffs sale by order of the bank holding the mortgage. The amount owed is 675K, it last sold for over a million! I am thinking the property would sell for maybe $200k? if it was listed by a realtor. There are several bigger nicer farms within a few miles for less than 675k, I think that number is totally unrealistic. I would like to buy this farm, and might pay the $200k for it. Will the bank take 30% of what they have in it if I am the high bidder at the sale? I have a call into my lawyer, because I have never done this before. Just curious if anyone has. I realize it is likely the taxes have not been paid, and may be other leins on the property, but if the price was right, I think it could be fixed up into a nice little farm, and it is close by.
Josh
 
To your question:

Will the bank take 30% of what they have in it if I am the high bidder at the sale?

ONLY the bank can answer that and our "opinions" of what they will take probably dont matter all that much to them..

I would for sure show up and be ready willing and ABLE to buy it at the sale. Of course, you have to have cash or certified funds to pay within a short time after the gavel falls remember

John T
 
If they disclose minimum accepted offer to you then they would have to indicate that to any other parties that inquire. Otherwise, they risk charges of discrimination (depending on the gender, religion, and/or ethnicity of the other parties) and improper conduct. So, it is still a matter of putting up a bid that will out do other bidders without overpaying. Sheriff's sales around here work like regular auctions where you can make counter bids. I don't know how PA works. Some bank sales around here work under the premise of just make a bid without knowing what the other bids are.
 
If a bank has a mortgage the taxes have most likely been paid, in my state, any other liens would have to be listed in the sale bill with the lienholders as co-plaintiffs, the sale is by order of the court, not the financial institution. In my state, by law, the property will sell for the highest bid if it is so advertised, by law, the properties legal description and terms of sale must be published for two weeks prior to sale by whatever paper is your local legal paper of record, it will always end with the terminology ''sells to the last and highest bidder for cash''. I would imagine that Pennsylvania has similar laws.
 
I work in Ag lending and we would do a couple things. At the sale we would have an appraised value, in this case I am guessing less than the $675k owed. We would try to get the highest bid as close to the $675k if that is what is owed against the property. If that is not obtainable, depending on the highest bid, we may not sell the property and just hold on to it instead. The thing is that the bigger the gap between what is owed and what it sells for the larger the loss. Typically this ends up in a Judgement against the mortgagee which will haunt their credit until they pay the difference between sale price and what they owed. My guess is your bid of $200k would not be accepted unless you were the only interested party. In that case they may decide not to accept it or try to work with you to increase what you are willing to pay. Check if there are also back R/E taxes owed on the property as well. These may become your problem once you purchase. Make sure no other creditors have attached liens to the property either. Your local registry of deeds you can complete a free search against the property to see what liens may be on there.
 
Forgot to add in there that we would not take a bid under the current appraised value of the property at a sale. So if it appraises for $300k and you offer $200k we would not accept that offer. LAA has also put in some good info. Carefully read the listing as each state is different and depending on who is foreclosing, the rules may be different as well.
 
Here in Ky. for the farm to be sold at the courthouse door, an appraisal
must be made and the minimum sale price will be two thirds of the appraisal.
Often here the bank or other lender will buy back the property even if it
sells for more than the amount owed. Don't ask me why, but I notice that
any property the bank does not buy back is distressed and not worth their
effort.
It does not matter what the amount is that is owed, it's all based on
the appraisal.
 
You need to read the specifics of the auction - they will be pulished since it is a Sheriff's auction. If there is a minimum bid amount it will say so, if there is a reserve it will say that also (though it may not state what the reserve is).

The auction terms will be an extremely long legal document written by lawyers for lawyers. But if you are looking at spending $200k+ it might be worth your while to read it or have your lawyer read it and cover the highlights with you.
 
Oops, forgot to mention that after a courthouse ( master commissioner)
sale that it is sold free and clear of taxes or any other lien, and a clear title
will be issued.
 
I'm going to attend a sale on Feb 22nd. They're selling a rancher house here in this development
built in 1962. It's being sold "as is" and it has .63 acre's of ground. It probably sold for around $22000.00 when new. I'm sure it will sell for more than that. Hal
 
You need to talk to a real estate lawyer in your state. Rules are all over the map on foreclosure sales. The advice you get here is worth just what you are paying for it.


Just some general tips:
Find out the terms of the sale- will they take 10% down, balance in 30 days? Balance in 30 minutes? Believe it or not, that is sometimes the case. In Washington, you generally have to have cashier's checks for the full amount at the sale.

You're not going to steal it, unless the bank wants you to. They will have an amount that is their bottom dollar, and they can "credit bid" up to the amount of their lien, without bringing cash.

Get a title report from a title insurance company, to see if there are any other senior liens, that will survive the sale (foreclosure sale wipes out any liens that are junior- that is, filed later- to the mortgage being foreclosed. But you buy subject to the liens that are senior, and you can't depend on the sale guy to reveal them. You have to do your own research.

Its nearly impossible to anticipate what the bank will do (ie, dump it to whoever is the highest bidder regardless of price, take it back themselves and then sell through a realtor, etc.). When I worked for Production Credit, we used to always bid the full amount owed, no matter how ridiculous- because then we showed our loss on "sale of acquired property" rather than the loan, which had much less impact on our capital. But now days, much depends on the financial condition of the bank, how much acquired property they already have, etc.

Figure out the rules, do your homework, and give it a go. You might just get lucky!
 
I bought a house on a sherriffs sale. Went to a title company and had them do the background work. A sherriff's sale means you buy all debts too and you have to pay cash for it or have a letter of credit from a bank. The property will sell for debt plus lawyers fees plus interest and late fees. DO YOUR HOMEWORK FIRST. If a title company screws up, they pay for their mistakes. I don't think lawyers work that way. They just give you their opinion.
George
 
Looked at buying a house one time that was foreclosed on. Had some pretty big liens on it. I was told that even after I bought it, the owner had 1 year to come up with the money to pay off the liens on it and take title back. So basically, I couldn't do anything with it till after the year expired. I passed on it. It was for sale by the bank itself and not at auction.
 
I've bought a couple that way. They are not all the same. Terms of the sale will be posted and it "is" what it "is." Some come with a quit-claim deed, some warranty deed, some with all liens and back taxes attached and some are offered free and clear.

If being sold "as is", make sure you do a thorough deed, encumbrance, lien, tax, and judgment search via the former owners name. It's all indexed in the County Clerks department (at least any state I've bought in).
 
Actually, buying at sheriffs sale is not a bad investment, even if the guy has a year redemption period. At least in Washington, if he does come up with the money to redeem it, you get all your money back plus interest at 12%. Not easy to make 12% these days. And very few people actually come up with the money to bail it out.
 
You will probably be bidding against the bank or a real estate agent If the bank gets the high bid they may come to you later to make a deal. If a realtor gets the high bid he will sell it to you for more than he paid for it.
 
Ohio experience...
3 years ago we bought a $250K house for 72% of appraisal value, Opening bid had to be 2/3 of appraisal. We did OK.

We've kept our eyes on this process. Looking for a rural farmette property. The cheese has been moved!

Even on properties which have been bid higher than the amount owed - and way above the appraisal, the bank continues bidding until they "get it back".

I think there is some TARP money getting back to banks that have "losses" on their Fannie/Freddie loans - but I can't prove it. The arithmetic of the numbers for current sales just doesn't make sense.
 
Mike, I think what you are talking about is a tax sale. A Sherriff's sale, you become the owner the day of the sale and no one can take it from you.
George
 
As the others said it can be tough to do. Typically the mortgage holder, will bid it to the amount owed. But with house real estate down, they may expect a write down regardless if they buy it and just might let it go cheaper. In the past we've tried a couple of times to get something cheap and were unsuccessful.
 
One big asset on this rancher it has public water and sewage. It's going to need work, but I was never in the house and the big window in front needs replacing. If you're thinking about bidding and have a friend that inspects home I would invite him along. Hal
 
Hal- hit the same link, look at Kerr Rd. I'd rather have that one. Personally, I'd rather not be anywhere near Belair. Too much traffic.
 
In North Dakota there is a law that lending agencies have three years from date of possession to sell the land. Then it goes up for bid to the highest bidder.
 
Maybe where you are. Here in Washington, tax sale and Trustee's sale (non-judicial foreclosure of a deed of Trust), no redemption. Sheriff's sale (after judicial foreclosure), one year redemption. We have very few judicial foreclosures here, vast majority are Deed of Trust non-judicial, because its faster and cheaper.
 
Depending on "where" it is in Pa., the gas and mineral rights could have some value
(IF..) included with the surface deed.
 
John T, you are from Indiana. Is there a different between a sheriff's sale and a tax sale.

I bought 2 places in 2003 on a sheriff's sale. A sheriff's sale is the only way for a bank for close and get the property in their name.

A tax sale is the county wanting property taxes and it may take 2 or 3 years for that to happen.

George
 
Just one big thing to remember"THE BANK IS NOT YOUR FRIEND" There are so many gov't programs. FHA FSA I know of one farm in our county that was sold by one bank. Three times in six to 10 years. Would buy at forclosure sale then sell it and finance a Guarenteed Bank FHA loan. You got to remember the FHA covers 10% of the amount of those loans so they are covered. They work all of the angles. Big Time not the old time friendly Banker.
 
Josh, is this a sheriff's sale, or a foreclosure sale? Here in Maryland, a sheriff's sale is usually for back taxes, where a foreclosure is by the bank for failure to pay the 'rent'. Bot are at the courthouse door, but at a sheriffs sale, there are redemtion rights, where a foreeclosure sale has few, if any rights of redemption by the owner.
 
Seems to me a Sheriffs sale is instigated by a Court decision, therefore it can be anyone who has obtained a judgment.
It seems to vary between State.
So if you insert "Sheriffs sales" in the engine you may see your State.
 
One of my millwrights was renting a house that had been foreclosed, it was a weird deal as they didn't evict him when they took possession, the bank was trying to get him to buy the house for about 80K, he was thinking about it. Sheriff's sale day came and he went to the auction curious about what it would sell for. Bidding stalled at $28K, he asked "is this the house at 428 Cherry street we're talking about?" They told him yes, he bid $30,000 and got it. He had to come up with the money (he had cash) and went to a closing with the bank, they were miffed he didn't bite at the 80K offer and clear the loan off their books but took the 30K and wrote off the balance.
 
In Ohio and Iowa if you are the high bidder on anything at Sheriff's sale it is yours with a clear title/deed/abstract. Any lien holder has to protect themselves at the sale. Meaning they have to bid it up above what they are owed.

The proceeds are dispersed to the lien holders by the county after all taxes and sales costs have been paid. Then the first lien holder gets what they are owed and then the second lien holder etc. Then if there is anything left it will go to the owned. The sales happening now usually doesn't even pay the first mortgage off. So the first lien holder bids it up to what they are owed. If it goes higher then they are out of the bidding. It is then up to the next lien holder if they want to bid it higher or let it go. Most of the second lien holders are just out in the cold lately.
 
You must log in or register to reply here.

Similar threads

Bruce from Can.
Tractor and Farm talk
Replies
8
Views
1K
SweetFeet
SweetFeet
J
Barn Drainage
Replies
19
Views
2K
Joel Casssell
J
super99
Farm Bookkeeping program
Replies
15
Views
898
super99
super99
J
Rental sale depreciation question
Replies
8
Views
1K
jhwis
J
C
My childhood farm
Replies
2
Views
796
db4600
db4600
Tractor Parts Tractor Manuals

We sell tractor parts! We have the parts you need to repair your tractor - the right parts. Our low prices and years of research make us your best choice when you need parts. Shop Online Today.

Copyright © 1997-2024 Yesterday's Tractor Co.

All Rights Reserved. Reproduction of any part of this website, including design and content, without written permission is strictly prohibited. Trade Marks and Trade Names contained and used in this Website are those of others, and are used in this Website in a descriptive sense to refer to the products of others. Use of this Web site constitutes acceptance of our User Agreement and Privacy Policy TRADEMARK DISCLAIMER: Tradenames and Trademarks referred to within Yesterday's Tractor Co. products and within the Yesterday's Tractor Co. websites are the property of their respective trademark holders. None of these trademark holders are affiliated with Yesterday's Tractor Co., our products, or our website nor are we sponsored by them. John Deere and its logos are the registered trademarks of the John Deere Corporation. Agco, Agco Allis, White, Massey Ferguson and their logos are the registered trademarks of AGCO Corporation. Case, Case-IH, Farmall, International Harvester, New Holland and their logos are registered trademarks of CNH Global N.V.

Yesterday's Tractors - Antique Tractor Headquarters
Website Accessibility Policy

Back
Top