Bidding at Foreclosure
What to know before your first auction
May 2008 -- We love to speak with anyone with an interest in bidding at an auction,
but we can't be your attorney!
Nectar does NOT give legal advice, and we can only pass on information that is
freely available in the public domain. Moreover, Nectar does not see the
properties, as we foreclose based upon legal descriptions. We do NOT know the
current condition of the property. We do NOT know the current occupancy.
So, our only advice would be; Speak with a real estate attorney!...
In terms of our auctions however, we can answer a few of the most asked
questions.
'How are auctions advertised?'... That varies according to the Deed of Trust
(DOT). When no specification is given then the number and spacing of
advertisements is guided by the laws of the Commonwealth of Virginia. Nectar
advertises in strict accordance with law and the terms of the DOT. All notices of
sale will appear in a newspaper approved by the county wherein the property lies
at least twice before the sale.
'What can you tell me about the property?'... The legal description appearing
in the advertisement is all we can tell you. Sufficient information is given in such
notices for you to investigate the land records.. Nectar includes information in the
notice if there is an IRS lien or a superior Deed of Trust.
'How much will the opening bid be?'... The laws of the Commonwealth, and to
various extent, the original DOT, define the maximum amount that the lender may
submit as a written bid. In general terms this means the lender may submit a
written bid up to what is owed to them, plus the foreclosure expense. This is known
as a total debt bid, and can be more or less than the original loan. The lender
may make a 'specified bid' for any amount not exceeding the total debt. In Virginia,
the auctioneer may accept only one written bid from any single potential buyer,
and may not actively 'bid up' for any party. A lender may however attend the
auction and bid on the property under the same conditions as any other qualified
bidder.
'How much money do I need to bring?'... The amount of the deposit is
published in the notice of sale. The auctioneer will almost certainly confirm you
have the said amount in certified funds prior to allowing you to bid. Most bidders
present certified funds made out to themselves, which can be endorsed if they win
the auction. Deposit amounts are guided by applicable terms in the DOT, but
generally represent roughly 8-10% of the original loan amount. Nectar does not
utilize a sliding deposit amount, thereby giving potential bidders the advantage of
knowing exactly how much is required regardless of the final sales price.
''How long do I have to close on the purchase?'... 15 days from the date of
sale. Should that fall on a weekend or holiday, the following Monday or workday. It
is important to understand that full cash payment (preferably by bank wire) will be
required.
'What if I fail to close on the purchase?'... Your deposit money is forfeited, and
you may be liable for the expenses of a resale.
'What if Nectar fails to close?'... In certain cases, problems may arise. A last
minute bankruptcy filing, a loss mitigation deal, a reinstatement by the borrower,
are examples, but by no means inclusive.
If for any reason, at the sole
discretion of Nectar, the sale is deemed invalid, the bidder is entitled only to the
quick return of their deposit money.
'What happens when/if I win?'... You will give to the auctioneer the proper
deposit funds and sign a contract, or memorandum of sale that defines the
particulars of the sale. It is then
incumbent upon you to arrange for closing and
payment within the 15 days allotted.
The auctioneer will be very specific to all qualified bidders as to all terms and
conditions of sale prior to opening bidding. We hope the information presented
here may be of some basic assistance to your understanding of the auction
process. We again emphasize that you should get legal counsel and be
certain you are fully acquainted with such auctions before actively
participating.
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