Hidden Property Costs Oneonta 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 - Chesser Realty ~ Kellie Place
607-434-5263
416 Chestnut St.
Oneonta, NY
Salvione Marilyn Rl Est
(518) 725-2344
112 N Main St
Gloversville, NY
Huber Matt Real Estate Broker Office
(585) 389-1024
40 Grove St
Pittsford, NY
Feinberg Jeffrey N Rl Est
(607) 770-1124
248 Horan Rd
Vestal, NY
Imperial Funding Corp
(718) 526-8200
9505 Sutphin Blvd
Jamaica, NY
Century 21 ~ Kellie Place
607-434-5263
416 Chestnut St
Oneonta, NY
Timberland Properties Inc
(607) 746-7400
74 Main St
Delhi, NY
Meyers Real Estate Holding Llc
(607) 263-2205
151 Main St
Morris, NY
Manhattan Association of Realtors
(212) 594-2233
350 5th Ave
New York, NY
S B Schwartz & Co
(212) 588-0700
460 Park Ave
New York, 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
- How to Buy Rental Property Oneonta NY
Buying rental properties can be a great way to build your wealth. However, as in most real estate investment, it is sometimes difficult to know if you've found a good deal - especially the first time. Here are some things to look for to be sure that rental is a great investment.
- About Buying a Foreclosure Property Oneonta NY
- How to Discover Property "Cover Up"s Oneonta NY
- Real Estate Note Oneonta NY
- How to Find a Property Appraiser Oneonta NY
- Public Foreclosure Auctions Oneonta NY
- Hidden Costs of Foreclosures Oneonta NY
- How to Avoid Property Repossession Oneonta NY
- Real Estate Investing Oneonta NY