how do foreclosure auctions work?

Just confused on the difference between sale amt, opening bid, winning bid, estimated value and assessed value. They are all so different.

Sale amount is the amount published bid in the notice of trustee sale and is typically the total due on the loan in foreclosure.
Opening bid is the initial bid placed by the lender. It is often discounted from the published bid in the hopes of selling the property to a 3rd party.
Winning bid is the bid that “won” the auction. If no 3rd party bids it will be the same as the Opening Bid and the lender becomes the new owner.
Estimated value is our estimate of the property’s value based solely on public records - similar in concept to a Zillow zestimate.
Assessed value is the value assigned by the county assessors office and is limited by prop 13 and therefore may be artificially low.

I am new to this process so I have a couple of additional questions.? Let’s say that there was a 1st loan of $500k and a 2nd loan of $100k.

  1. The property shows up at auction with a published bid of $500k right??? Or is it $600k?
  2. Let’s say that the initial bid is discounted to $400k and only one person wants to bid on the property.? Does the bank bid against that person, trying to increase the sale amount, or are they happy to get their opening bid and walk away?
  3. Assuming my 2nd question is answered no, they do not bid against you, and the property sells for $400k, does the new owner inherit the 2nd lien of $100k as well, or does it depend?
  4. All the legal notices I’ve seen suggest that you have to pay for the full bid amount at the auction.? Or are there ways of getting a mortgage from the selling bank?
    Apologies if this is in the wrong forum.
  1. Depends on which loan shows up at auction. If it is the the first the published bid would be around $500k, it were the second it would be around $100k. ? 2. The bank can issue a “high-low” bid, where they start the bidding low, but bid up to some amount. They can’t bid more than the amount they are owed unless they show up with cash like everyone else. Certainly happens, but in the majority of sales the banks do NOT bid up their opening bid. ? 3. If you buy the first mortgage all junior debt is wiped out, so NO you would not have to pay the second. There are a couple of potential exceptions - for example the IRS has a 120 day right of redemption (they either have to buy the property from you for what you paid, or they get wiped out). ? 4. No. You have to pay in full at the time of sale. In some markets you will find hard-money lenders that will loan you money to buy at the court house steps, but no regular lender does to my knowledge. Many bidders use credit lines secured by other property.

Also be sure to look at our Buyer at Auction forum - many of these questions have been answered there. Some in quiet a bit more detail.

Where can I find the Buyer at Auction forum?

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