Hidden Property Costs Massapequa 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

Century 21 Amiable Home Sales
(718) 479-5600
21909 Jamaica Ave
Jamaica, NY
Diamond Home Sales Inc
(718) 454-7800
21137 Jamaica Ave
Jamaica, NY
United Mutual Realty Inc
(718) 454-9292
18804 64th Ave
Flushing, NY
Sunlite Realty Corp
(718) 848-8300
11820 Rockaway Blvd
Jamaica, NY
Jpy Realty Corp
(718) 739-4663
9005 Merrick Blvd
Jamaica, NY
Own A Home
(718) 738-2000
11705 115TH Ave
Jamaica, NY
Arro Real Estate Inc
(718) 463-6161
21535 Jamaica Ave Ste 1
Jamaica, NY
Target Realtors
(718) 423-4700
3923 Bell Blvd
Flushing, NY
Branes, Avi - Genral Realty
(718) 465-4200
24125 Braddock Ave
Jamaica, NY
Weichert Realtors
(631) 661-6900
170 Deer Park Ave
Babylon, 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
- Public Foreclosure Auctions Massapequa NY
It helps that researching properties has become much easier with advances in information technology. In the past, home buyers and real estate investors sifted through piles of documents at the local courthouse to properly research properties.
- Real Estate Note Massapequa NY
- How to Discover Property "Cover Up"s Massapequa NY
- Hidden Costs of Foreclosures Massapequa NY
- How to Find a Property Appraiser Massapequa NY
- About Buying a Foreclosure Property Massapequa NY
- Real Estate Investing Massapequa NY
- How to Buy Rental Property Massapequa NY
- How to Avoid Property Repossession Massapequa NY