Hidden Property Costs Baldwin NY

The majority of foreclosure auctions are conducted by the lien holder in the first mortgage position, but you need to check if that's the case for any property that interests you.

Local Companies

Laujel Realty Corp.
(718) 239-0890
2440 E. Tremont Avenue
Bronx, NY
Fillmore Real Estate
(718) 368-2600
2990 Ave U
Brooklyn, NY
Bonanno Homes Realty Inc
(516) 420-9055
1068 N Broadway
Massapequa, NY
Lazo America Realty Corp
(718) 672-0089
4026 75th St
Flushing, NY
Abatelli Realty
(718) 352-9000
2455 Francis Lewis Blvd
Flushing, NY
Baldwin Bernard Jr.
(718) 588-4595
790 Concourse Village # 11H
Bronx, NY
Eretz Realty Ltd
(718) 256-9595
5916 18TH Ave
Brooklyn, NY
Butts Realty Inc
(718) 899-8717
2605 94TH St
Flushing, NY
S & H 88th Steet Assoc
(212) 860-1800
60 E 88th St
New York, NY
Grand Centurion Realty
(718) 205-5572
5058 69TH St
Flushing, NY
Data Provided by:
  

By James J. Saccacio, RealtyTrac Chief Executive Officer

If you buy a property at a foreclosure auction, you may end up forking out more than just the winning bid amount to own the property free and clear. That’s because some debts attached to the property — called liens — survive the auction and carry over to the new owner.


isToken

Foreclosure auctions provide some fantastic opportunities to purchase a property well below its market value as long as you’re familiar with the ground rules. One of those ground rules is to never bid on a property unless you’ve researched the title and are aware of any liens that you will have to pay off if you are the winning bidder. Although most liens are cleared by the auction, that’s not always the case, according to national real estate speaker and author T.J. Marrs.


"Although it may vary from state to state, for the most part all liens except property tax liens are cleared by the foreclosure process," he said. "Other than the property tax lien, the first mortgage lender is likely to receive first funds produced from the auction. Any remaining funds would then go to the second lien holder, third lien holder, and so on. Even the IRS is secondary to existing senior lien holders."


The order of the liens is determined by the date those liens were recorded. If a second lien holder forecloses on the property, the first lien will typically survive the auction and the winning bidder will need to pay off that first lien amount to own the house with a clear title. A clear title is needed to resell the property. Furthermore, the winning bidder could be foreclosed on if the first lien amount remains unpaid after the foreclosure auction.


Researching the Title

The majority of foreclosure auctions are conducted by the lien holder in the first mortgage position, but you need to check if that’s the case for any property that interests you. And you need to check if the property has any current property tax liens recorded against it since those also survive the auction. You can find any liens recorded against a property at the local recorder’s office, through a local real estate agent or online through property data aggregators like RealtyTrac, which compiles lien & loan history information for auction properties nationwide. This research will allow you to determine the current state of the title and the position of the lien that will be up for auction.


You should enlist the help of a local real estate agent or real estate attorney if you’re not comfortable researching and interpreting the title information yourself. You can also ask the trustee in charge of the auction if the lien being foreclosed is in the first position or if it is "subject to" other liens.


If you’re interested in an auction property with property tax liens or other liens that will survive the auction, either avoid the auction altogether by working out a deal with the owner in default or make sure you account for those other liens in your bidding. Marrs recommends subtracting the amount of any liens that will survive the auction from 70 percent of the property’s market value to come up with your maximum bid amount. Here’s an example for a property with a market value of $200,000 and a property tax lien of $1,500:


$140,000 (70 percent of market value)

- $1,500 (property tax lien amount)

= $138,500 Maximum Bid


But if that same property had an additional lien of $50,000 not cleared by the foreclosure auction, your maximum bid would be a lot lower:


$140,000 (70 percent of market value)

- $1,500 (property tax lien amount)

- $50,000 (surviving lien amount)

= $88,500 Maximum Bid


You should be willing to invest the time and money it takes to assure once and for all that the property you are bidding on is worth what you think it is. Any investment you make in research is miniscule compared to the potential risk of assuming unknown liens on a foreclosure property.


Click here to search for bargain properties

Related Articles
- Real Estate Note Baldwin NY
When it comes to real estate note dealing, there is a lot to be concerned with. Whether you have just learned what a mortgage note is, or you have had a great deal of experience buying and selling them, chances are that there is always going to be something that you'll have questions about. Indeed, individuals may have many questions when it comes to their own mortgage, the mortgage note holder, and the seller, but there are some basic principles that one should remember in order to keep everything organized!
- How to Buy Rental Property Baldwin NY
- How to Avoid Property Repossession Baldwin NY
- How to Discover Property "Cover Up"s Baldwin NY
- Hidden Costs of Foreclosures Baldwin NY
- Public Foreclosure Auctions Baldwin NY
- How to Find a Property Appraiser Baldwin NY
- Real Estate Investing Baldwin NY
- About Buying a Foreclosure Property Baldwin NY