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Farm at Auction

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  • Farm at Auction

    Has anyone ever bought a farm through an auction? Did you find that it went for more or less then then assesed value?
    We have bought houses at auction before so very aware of the possible fails with soundness and structure.
    I'm just interested in the different ways the bidding might go.

    Thanks!!

  • #2
    It depends on the type of auction-a regular auction arranged by the homeowner (or their estate), or a foreclosure auction by a bank or mortgage company, or a tax sale for non-payment. In this state (and it varies by state) if you buy a repo from the bank or mortgage company people have a certain amount of time to reclaim the property by paying the back monies owed. For a tax foreclosure the owner has one full year to pay the back taxes and interest-and they don't have to pay you for any improvements either-you can lose big time on those. A real auction with a clear title can get into a bidding war and cost over what you thought it should, or sometimes you might get a distressed property cheaper if you get lucky. The big catch for me would be inspection of the property-is it 'as is' without recourse or can you have an inspection before the auction?
    You can't fix stupid-Ron White

    Comment

    • Original Poster

      #3
      It's a clear title auction with short notice advertising. We are having an inspection done pre auction. With the home being built only 12 years ago (by a good builder) We aren't expecting any issues. The big issue is going to be how close to assesed value it goes for. The guy who is selling in wants to pay off his morgage and have a little in his pockekt left over. Estimating how much he paid for the property, house, and building and deducting the 12 years of payments this should be more than in our price range. We are just hoping that the price isn't inflated by another over zealous bidder! It maybe a long shot. There isn't a comparable property on the market in the area so it is hard to factor how much it will go for. I'm hoping the short notice of advertisng (4 days) will work in our favor due to the cash deal.

      Thanks!

      Comment


      • #4
        I couldn't tell you how much the property will go for in terms of assessed value. Real estate values are higly localized. ! But I hope when you estimated the 12 years of payments, you didn't estimate them as 100% principal payments? Very very little of the first half of a mortgage paydown go towards principal. You can google "mortgage calculator" and find a paydown schedule. Generally speaking though, banks aren't really loaning a lot of money right now so you may be ok in terms of competition. Depending on the type of auction, I believe you have to come with 10% of the assessed value to put down that day.

        One other thing, my husband and I closed on our place a couple of months ago, one thing that was mentioned to us is that banks are really scrutinizing houses with land. Our place isn't currently set up for horses (but will be). The banks I guess are concerned you may carve out a lot and sell and now their investment isn't worth what they loaned you. You may not have that issue since it's already a farm property. Good Luck!

        Comment


        • #5
          You do need to watch out for one thing-a friend was looking at auction property and should have decided her absolute limit on money, but she didn't. There was another bidder at the end that kept running up the prices, and she found out later that she overpaid (she got caught up in the excitement and really wanted the place) and that the person was probably a shill for the auction company. I don't think many companies allow this, but do watch out, and decide the most you can pay.
          You can't fix stupid-Ron White

          Comment


          • #6
            Go to tax assessor's office in that county and get the assessed vaue for last year.

            Go to the courthouse and to the deed room. Look up the deed and see how much the people paid for the farm 12 yrs ago.
            Right after the deed, usually filed on the next page, will be the mortgage.
            You used to have to buy the little books with the amoritization amounts, now you can do so on line to see how much principal has been paid. Usually after 5 or 7 yrs the principal really increases, plus you can see how much they paid down on the property.

            Check while you are there in the courthouse, if there are any 2nd or 3rd or above mortgages on the house and land.

            And while there check and see if there are any liens on the house and land. In some states, the liens can be filed for work on the house, services not paid, and even for furniture not paid for.

            And make sure there is no IRS lien on the house and land. An IRS lien trumps everything.

            You want to buy the land for less than the assessed price if possible, so if you know how much the pay off on the mortgage(s) is (are) then you will know what amt they are wanting.

            Also check the assessed values of surrounding properties. If this house and farm is overpriced, you might have a hard time selling it, if the surrounding farms are much cheaper.

            Comment

            • Original Poster

              #7
              Thank you!
              I have the assesed value of the house as of last year. However it hasn't changed in a number of years. I know that the assessed value is below maket value. The land alone is worth 8/10th of the assessed value.

              I wasn't aware that you could look up the mortgage. I will certainly do that.

              They bought the land then built the land and house,, therefore it won't be as easy to see what they paid for the farm, however I can get a fairly good idea of what they should have put into it.

              Just found it online. Assessed value is 50% market value. However they paid about 1/3 for the land that it would be worth now..

              Checking for liens now.

              Awesome the amount of information you can find within minutes at your finger tips.

              Hopefully it will go within the range we are willing to spend, which is quite a bit below market value... hopefully no one else with show up!

              Thanks!

              Originally posted by cloudyandcallie View Post
              Go to tax assessor's office in that county and get the assessed vaue for last year.

              Go to the courthouse and to the deed room. Look up the deed and see how much the people paid for the farm 12 yrs ago.
              Right after the deed, usually filed on the next page, will be the mortgage.
              You used to have to buy the little books with the amoritization amounts, now you can do so on line to see how much principal has been paid. Usually after 5 or 7 yrs the principal really increases, plus you can see how much they paid down on the property.

              Check while you are there in the courthouse, if there are any 2nd or 3rd or above mortgages on the house and land.

              And while there check and see if there are any liens on the house and land. In some states, the liens can be filed for work on the house, services not paid, and even for furniture not paid for.

              And make sure there is no IRS lien on the house and land. An IRS lien trumps everything.

              You want to buy the land for less than the assessed price if possible, so if you know how much the pay off on the mortgage(s) is (are) then you will know what amt they are wanting.

              Also check the assessed values of surrounding properties. If this house and farm is overpriced, you might have a hard time selling it, if the surrounding farms are much cheaper.

              Comment


              • #8
                And remember, do stop by the courthouse the day before the auction to make sure no last minute lien has been filed. The clerks are helpful and the title people will help you, there are always guys down there searching titles. And the clerk will tell you if a lien was just filed and not yet put in the computer and on the books.

                Lots of information (and good gossip about the property and the owners) in a courthouse.

                The first mortgage will be on the next page after the deed was filed. Other mortgages will be later, up to this year, so search the index too.

                And check for an IRS lien. The IRS can take the land even after you buy it, and will reimburse you, but at 3% interest (if it is the same as years ago).

                Comment

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