COURT ORDERED SALES....CHANCE FOR A GREAT DEAL?
Again here is the short answer... Not, in the majority of cases! Let me explain what is involved here. Inexperienced agents who have never been in this situation, are not who you want to represent you here.
WHAT IS A COURT ORDERED SALE?
Court ordered sales are just that. A judge decides to force a sale, eg: When an owner has not met financial obligations such as mortgage payments, when a divorcing couple cannot come to an equitable agreement, when the tax man wants to be paid, when a property has been taken away by law enforment under the " Proceeds of Crime" legislation, and a whole host of other reasons.
These come up for sale more often than you think, bank foreclosures, the most common. After every single avenue to collect has been exausted, by the bank, or whomever is owed money, usually quite a long period of time, an application is made to the court, and a judge finally rules to sell the property. The seller, has no more to say about this, unless they can come up with some money real quick. When it has gone this far, that usually will not happen. An agent is chosen, the house is for sale. What happens next?
This is where it looks like a good deal. Banks have had to do this many times and know exactly what works. The property is usually underlisted. Just like I have said before, this is how you get competing offers, or multiple offers, a bidding war begins, the result, a much higher sale price. It is the court's duty, to protect the interests of the bank and get the highest possible sale price.
AS IS WHERE IS
After dozens of buyer's and their agent's have flocked to this new listing because of what appears to be the deal of a lifetime, they all write offers. The offers must be completely subject free, except " subject to court approval" and an '" AS IS " Upon Possession, clause needs to be in the offer as well. You see... the owner of the property has no more say, and upon being forced to vacate, does not care about what the condition of the property is. Have you ever heard the term " nothing left but the kitchen sink?"....I have seen some of these homes at possession time, that did not even have the kitchen sink left!
THE BIDDING WAR
Ok, so now your offer has met the conditions, it's time to present... Not so fast! When the selling agent and his principal ( bank or whomever), have decided they have enough offers ( which could take weeks), a date with the court has to be set, to present all the offers at the same time. The judge will accept one of these offers. So, you wait for this date, certified deposit cheque is attached to the offer, you and your agent, or just your agent appear in court. When your turn comes up, and you approach, you will see that the judge has already posted the best offer, which at this point, is willing to accept.This is usually posted on a table in front of the room. The judge will then ask all the agents who had a lower offer, to retrieve them, giving them the option of re-submitting them at a higher amount than the posted one. This is done, after allowing them a short conference with their buyer. Since these offers are subject free, nothing else matters but the price. The highest price wins, no if's and's or butt's. The procedure is designed in this matter, to solely benefit the bank, or whomever is owed.
At this point most of the buyers and their agents leave, not willing to out bid the posted offer. In most cases one or more buyers remain, re-submmiting a revised, higher offer than the posted one. The judge now accepts the best one, and it's all over. The property just sold for as high or higher than any of the comparables. Upon possession one problem remains, it's not known what kind of condition the property will be in. As I have said so many times, I work for you. In this case it is really out of my control.
MY FRIEND GOT A STEAL ON A FORECLOSURE!
Generally, the only way to get a good deal on a foreclosure, is if the economy is in a slump. When interest rates are high, unemployment is high, and there are more properties for sale than there are buyers. In this case when a foreclosure or court ordered listing is on the market, there will not be competing buyers. The listing agent may have to wait for months before the first offer comes in. When that one does come in, an appointment with the judge is made, that single, (usually low ball offer), is submitted, and the judge will accept it. That's when you get a steal!
The current market is definitely udergoing a major correction at this time! I don't know if it can be called a slump yet because some of the factors needed for a slump have not yet materialized. Those factors are high interest rates and high unemplyment. However if you are interested in dealing on foreclosures now is the time to start looking.
I have been involved in many court ordered sales, I can prepare you for this process and make it as easy as possible to give it your best shot!
