So, the neighbor's mail was in my box today. I read it before I realized it wasn't mine. One of the items of mail was a postcard with a foreclosure notice. It said the house is going to be sold to the highest bidder at a public auction on Nov 1.

House is in unincorporated Harris County. Is this postcard even legit? If so, where might this auction be held, and if one was interested in placing a bid, what would be the process for doing that? Is there someplace online I can find more info about the auction?

Edited to add a Google search of the address found the site auction.com. It says the auction is at the Bayou City Event Center. Original question of "Is this legit?" still applies re auction.com.

I've bought two houses on Auction.com. it's a legit site.

Good to know! Any tips or tricks? Better to go in person vs bid remotely?

Win At Life said:

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I've bought two houses on Auction.com. it's a legit site.

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What was the process like after you won in order to get keys / access to your new property?

May be a stupid question, but I assume the auctioneer may not have keys, if it was a hostile foreclosure, so do you have to break into your new place and then rekey?

I only bid on line and I only bid on houses that were not occupied (didn't want to mess with evictions). Auction.com will bid against you. When the bid increment gets smaller you are close to the reserve price. If you are the high bidder, but below the reserve, they will email you after the auction and try to negotiate a closing price after the auction ends. I got into the first house through a large doggie door. The second one had a key in a realtor lock-box, because it was also listed on MLS (not sure why that was, but I think they list some there to get more exposure to their site; maybe because it was a more expensive property).

Thanks for the information. This house is occupied, and I know the people who are living there. I would not be the one bidding, but it could still be weird.

Sounds like it's not a one and done bid, but you have the chance to increase your bid as the auction proceeds...is that correct?

The opening bid is significantly below what the house sold for almost 10 years ago, but the "estimated resale value" auction.com has for the listing is ridiculously high.

Thanks! That's all really good info. The estimated resale value is so high it makes me think the reserve might be high, too.

But, since I live there, I kind of know what a good bid would be for it to be a good investment (and to deal with the hassle of getting the people who live there out). If they want more than the number I have in mind, then it wouldn't be worth it.

Any reason or advantage to submit an initial bid that's higher than the opening bid?

If you buy one of these, are you liable for any loans or liens if there are any on the property?

Found this on their site:

Most Liens are removed after a foreclosure property sale, but certain liens may remain.
Here are some examples:

• Any lien recorded on title prior in time to the foreclosing mortgage.
• First Mortgage (if the foreclosing mortgage is a second or third mortgage
• HOA or COA assessment liens (in certain states)
• Mechanic's Liens (in some states)
• Government liens such as state and federal tax liens, city or county liens, US Government liens.
• IRS liens (IRS may buy the property within 120 days after sale at the price paid at foreclosure sale)
• Code Enforcement Liens, Environmental Liens, and Utility Liens
• Child Support Liens

Any juicy details on why they are getting foreclosed on?

So I saw that and was wondering about it, too. But IDK how current ownership would affect that.

Short version of the story is an older couple bought the house for their son and his wife. Dad died and ownership transferred to his wife. Son and wife got divorced, but she continues to live in the house with the kids. Mom died 5 years ago but CAD says the home is still in her name. It doesn't even say "estate of", just the mom's name, same as before she died.

That's good to know. The HCAD assessment has always been high because there was never any HE, but it's gotten out of hand in the last couple of years. That may actually be the reason the house is being foreclosed, but IDK for sure.

Who would run the title report?

Also why wouldn't the auction.com company have to pay the delinquent taxes with the proceeds from the auction?

Edited to add: search of the district clerk website did not find any civil suits against this property. There is one against the other property that was part of the mom's estate.

You need to work with a title company to run a title report for you. Auction.com wouldn't pay off anything since they are just a service provider and don't own the property or the note. If the house has truly been foreclosed on, then the previous mortgage is no longer applicable (unless it was a second loan that was foreclosed in which case the buyer would still be subject to the first mortgage) but plenty of other liens or potential liens could still exist as outlined above.

I don't want to sound like a jerk, but there are tons of things that could go wrong here if you aren't completely knowledgeable about the exact situation so it isn't as simple as thinking you could get a deal on a neighboring house. Not to mention the potential issues dealing with removing a mom and kids who live there or become their landlord.

How does Auction.com negotiate with the "highest bidder" if they don't own the home...or are they negotiating on behalf of the entity (bank) that does own the home?

You don't sound like a jerk. It's definitely a risky purchase. I think I'm pretty well aware of the problems/challenges, the least of them being the fact that my neighbor of 10 years still lives there.

The house is actually in "pre-foreclosure". The listing states it can be pulled at any time, right up until the auction starts. But, if the house does make it to auction, someone is going to buy it. So, I'd rather it be someone I know, if he is truly interested. He's going to get in touch with the title company that he used to purchase an investment property a few months ago to see if they can help.

After doing some additional searching, I do think the foreclosure is by the lender/bank. Hopefully they've been paying the property taxes. And the mom has been dead for 5 years, so it's been at least that long since anyone has even been able to take out any sort of second mortgage or lien.

There is always the possibility that the son wants to make a bid. Or pulls some sort of Hail Mary to get it off the auction block.

You should be able to check the HCAD record and link to the taxing authorities from there to quickly screen tax payments. I believe the Montgomery County tax assessor actually collects the Township tax even though the home is in Harris County…at least that's who bills us for our Township taxes.

Any title company should be able to run a title search. They usually cost a few hundred bucks.

Beyond that I know nothing but definitely interested in following this to learn something!

Thanks. I knew a title company would be the one to run the search. I wasn't sure if they would do it on a property that you're not under contract to purchase.

And yes, we do pay our Township taxes to Montgomery County. I didn't think those websites listed if the taxes were paid or not, but I'm going to look!

And yes, I'm far enough into this that I want to learn!

I know you call pull PDFs of tax bills that will show past due amounts, but I have no clue how current those are (maybe they have to be a year late in order to show up in the next statement?)

Very interesting.

Checked the Montgomery and Harris County Tax Assessor websites. The tax payments are current for both. Mortgage company has been making the payments.

If it's a "pre-foreclosure" sale then you are actually bidding to buy the house subject to the existing mortgage which will have to be paid off in full as part of your purchase. You are bidding against the current lender who can, and most likely will, credit bid up to their outstanding mortgage balance plus penalties and interest. In other words, auction.com isn't the entity bidding against you, it's most likely the current lender (or servicer, no practical difference) who can bid up to their amount owed without actually needing any additional money. That's also likely set as the reserve amount for the auction.

Said another way, if you want to win you'll likely have to pay equal to or more than the outstanding principal, interest and penalty balance which may or may not be a "steal" depending on the circumstance.

Regardless, if you are serious then get a title report asap and hire a lawyer to review it and provide guidance on the subsequent eviction requirements and timeline to get your house back. In the meantime, you should pray the current resident doesn't trash the place once they learn they're getting the house sold from under them and evicted.

I would expect that the reserve is what is owed (or close to it). But the original purchase price on the house was not that much (relatively speaking), and it was purchased almost 10 years ago. So, I'd be surprised if the balance due is more than the original purchase price, and that amount would be a steal in today's market.

I don't think the woman living there would trash the house. Like I said, she's lived there for 10 years and has two young kids. Granted, I can't say for sure, but she's not a renter. This is her home, she (and her ex) just never technically owned it. I'd be more concerned about her refusing to leave, but we've discussed that scenario. The person I know who is interested in purchasing it would probably even be willing to rent it to her, but based on what I know about the situation, she can't afford it. That's why the ex was supposed to be paying the mortgage in the first place.

What befuddles me is the notice I got the other day (and left at her door), was not the first notice. Clearly this issue has been going on a while, and she should not be in the dark about the situation because the mail has been going to her house. My guess is the ex has fed her some line of BS that he's got it all under control. Otherwise, why wouldn't she have just moved out by now to avoid an eviction.

Sounds like you or your friend are convinced it's a good idea so I wish you luck and hope everything works out.

You are totally misinterpreting my posts. I have acknowledged and understand the risks. But I also know there are factors specific to the situation that ~could~ make it a good deal. Which is why we are even bothering to look into it. If this was just some random house in a random neighborhood, it wouldn't even be worth the effort.

It's starting to sound like you've already decided it's a terrible idea and it's your job to convince us of that. Or maybe you want to bid yourself. But there is no harm in contacting a title company. I would't even be suggesting that idea if I wasn't privy to some of the details of the situation. No one has even placed a bid or turned over any cashiers checks at this point. It could all go to crap. I'm fully expecting the listing to get pulled before the auction.

Win At Life said:

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I think you can just enter your max bid, but I chose not to do that. I liked to see how the bid increments progressed and then stopped when I could tell I was getting close to the reserve. Auction.com com over-bid against me on both of them, so technically I wasn't the high bidder on either of them, and lost the house. But I really was the only high bidder that wasn't auction.com themselves, so they came back and negotiated after the auction closed on both occasions.

The opening bid is always way less than the reserve, but they will never let it go that cheap and will bid against you to get it close to the reserve if there are no other real bidders. You can tell how far from the reserve you are by the bid increments. It starts at 20K or so and then reduces down to 5K or even less as you get closer to the reserve.

Also, there's usually about a 5% buyer's premium, so take that into consideration.

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Wait…so you can enter a max bid, but the site, auction.com, who can presumably see max bids input into their site, can also bid on the property? Seems sketch….

So, if I'm understanding everything properly, auction.com is bidding on behalf of the bank and/or trustee for the mortgage that's in default. But, as the previous poster above said, If they end up submitting the highest bid, the bank/auction company may come back and try to negotiate with the next highest bidder. If no one bids, the property defaults back to the bank anyway (and the bank can try and sell it on the "regular" market).

It does seem to be a little bit of a sketchy way to get others to increase their bid, but I guess that's why it's important to have a max that you are willing to pay. And to understand what's actually happening.

We are working that angle. Have to go through the ex/son of the older couple who purchased it in the first place. Woman living there has no ownership in the house.

As a side note, if the parents financed the house and did not disclose that it was not their primary/homestead residence and they would not be living there, how might that affect anything related to the mortgage itself?

I dont think it will affect mortgage but I think that it could have some tax implications if the CAD finds out.

They never declared homestead on it. The tax assessment is out of control.

But mortgage applications make you specify if it's an owner-occupied resident. I was wondering if failure to do so could be fraud or somehow make the mortgage invalid.

That does not matter now. If there is a mortgage it has to be addressed. If the mortgage company takes a loss it will be them to address the loss with the owner.

The two people on the original mortgage (and the only one I can find recorded) are both dead.

So how does he keep it? Pay the mortgage right before auction closes? I must have missed how he could use this to keep the house. VEry interesting.