Master Commissioner's Sale

Hi Bill,

The Lender doesn't actually put forth money to purchase the home back. They generally start bidding at 2/3 of the Master Commissioner's appraisal amount (which is a lot less than what the lender is owed) and have the option to bid up to their Total Debt amount in the event there is competitive bidding in hopes that they can recover some of the amount that is owed on the property. But they do not always bid that high, sometimes they start at 2/3 and stop at 2/3, and if someone bids a dollar more that individual is the purchaser of the property. Whatever the purchase amount is, whether purchased back by the lender or by a 3rd Party, the amount is applied as a Credit to the Lender's Judgment against the borrower. The lenders usually always end up taking somewhat of loss and never recoup the total amount they are owed.  There are good deals to be found at the MC sales, but beware of disgruntled homeowners that may want to damage the property before the house goes to F/C sale. Any purchase is made "As Is"

Experts, I am trying to evaluate how much risk I will have to take as an invester. Before the master commissioner sale, the for sale list is available almost 1 months earlier. I wonder if I examine the property say, two weeks before the court date, and everything seems OK, does borrower still have a chance to get into the property and damage it after my examination? And also, is it possible I can get pemission to enter the property for a thorough inspection, instead of just scrolling around? Except the information released by court, can I find furthur information about the property from the lender or 3rd party?

Thanks

Jimmy Lee,

Investing in real estate nearly always requires some risk.  The borrower may still live in the house until after the foreclosure auction is completed, and they may even have to be evicted by the purchaser.  As far as more information about the property, you can research the county records (PVA, County Clerk, etc.) to find out when and for how much the home was purchased, liens against the property (mortgages, tax liens, mechanics' liens, etc.).  Purchasing foreclosure properties at the auction is the riskiest time during the process.  There are three phases during which you could purchase a property heading to foreclosure.  1) BEFORE THE AUCTION - find the homeowner and purchase the property from them (depending on the equity position, this may require a short sale).  2) AT THE AUCTION - bid at the courthouse steps.  3) AFTER THE AUCTION - find out who purchased the property at the auction (the bank or a 3rd party) and see if they will sell the property to you.

There are advantages and disadvantages to all 3, but generally speaking BEFORE & AFTER you should be able to access the property for an inspection because you will have made contact with the owner of the property, while that may not be the case with purchasing AT the auction.  WHENEVER you buy ANY property - do your homework, know what you are buying (it is possible to buy a property AT THE AUCTION that is being sold subject to other mortgages or liens - you need to know that kind of thing.  Keep asking the questions, and keep doing your research.  Foreclosures CAN be a tremendous opportunity, but like all real estate, if not done with careful planning, they can be a disaster.

Kevin Griesser, Real Estate Investor (also licensed REALTOR)

Are the properties for the McCracken County Master Commissioner's Sale listed online or are they only done at the "courthouse steps"?

I am interested in bidding on property at a Master Commissioner sale.  I have never done this. I read that I could purchase the property from the owner, even though it is in forcloser. Is that true?

How would I know what the amount was? Would it have to be the amount owed to the bank or whatever amount the owner and I settled on? 

There are two names listed as defendants. What does that mean? One of them has the deed for the property. Why would another party be listed that doesn't have a deed?