Opening bid lower than Published bidForeclosureradar frequently shows that the ?Opening bid? is lower than the ?Published bid? (in Santa Clara County where I was searching). Is there any way to know or estimate the opening bid prior to the auction (a rule of thumb formula)? I assume the “opening bid” determined by the lender at the auction?Also, will the lender commonly offer a low ?Opening bid? then send a lender representative to bid up the property significantly over the ?Opening bid?? Is this a common lender strategy?PS Thanks Sean for all your thorough and articulate replies. I’m amazed by all your insightful comments and help, day after day!
Right now the average discount at sale (discount from published bid in the notice of sale, to the lenders opening bid at the trustee sale) is 40%. And nearly 90% of sales are discounted. So yes, it is common.
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We just wish trustees would publish those opening bids earlier, making it easier to know which ones to research. In the mean time I’d suggest making a habit of watching the sales each day (it is easy using ForeclosureRadar - just do an “Auction” search). You should be able to get a feel for which lenders are most aggresively discounting in your area, and on which properties.
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Lenders don’t send representatives other than the auctioneer, but they can give the auctioneer instructions to bid up the property on their behalf - this is commonly referred to as a high-low bid. These are a pain for auctioneers, so unless forbidden by the lender they will typically let you know ahead of time. If you ever see a winning bid of $1000 on a property that became bank owned, you can bet it was a high-low bid and no one bothered bidding as the auctioneer let everyone know he would be bidding it up. While this happens often enough not to be uncommon, it is not typical. You can buy most properties for $0.01 over the opening bid.
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Thanks for the nice note - much appreciated!