minimum Bid? Asking Price? Original loan?

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Permalink Reply by HUD Foreclosed on June 17, 2008 at 7:17pm

Hi Sundeep,

Thanks for using the forums. That's a great question, and one that often confuses buyers.

The term "original loan" refers to the loan amount on a property that has gone into default due to a missed payment. This is what is known as a "pre-foreclosure." It is possible to acquire the property for that amount depending on the homeowner's circumstances. You won't really know until you do a little research and figure out what the story is. If the homeowner doesn't take care of the situation (bring the loan current, sell to an investor like you, negotiate a short sale, etc.), the property is headed for auction.

"Minimum bid" refers to the starting point on an auction property. If the property doesn't fetch this price, it goes back to the bank/lender as an REO (Real Estate Owned).

"Asking price" refers to the listing price on an REO ("bank owned") property that has been listed for sale.

Hope that helps!

-HUD Foreclosed

Permalink Reply by Patricia Isby on July 6, 2008 at 5:52pm

Is it true that if you take on a property paying the asking price, you take on the taxes that's owed on that property?

Permalink Reply by conniej on July 10, 2008 at 4:13pm

Good question. I think that is something you work out with the lender on an REO. You definitely have to bring the taxes current on a pre-foreclosure.

Permalink Reply by HUD Foreclosed on July 10, 2008 at 5:03pm

It may differ from state to state, but this is how it generally works in California:

At an auction it depends on what loan is on the auction block. If you are bidding on the loan in 2nd position, you will be responsible for the taxes and for the loan in first position (so be careful that you do your homework). If you are bidding on the loan in 1st position, the answer is maybe. It differs every time. If you are bidding from the tax assessor themselves, then no they will wipe away everything.

If it is an REO (bank owned), the bank has already brought the taxes current.

Permalink Reply by Debra Monte on July 16, 2008 at 1:02am

And what about transfer taxes?

Also, how do you find out how much is owed in taxes?

Permalink Reply by HUD Foreclosed on July 21, 2008 at 4:26pm

Hi Debra,

Real property transfer tax (RPTT) handling is variable from state to state. Sometimes states even give local governments (e.g. the county or the city) the right to manage legislation regarding transfer taxes. In some cases, you'll find transfer taxes both on the local and state level. You'll definitely want to do some research about this for your local and state governments on your own. You might try doing a Google search for "(city name), NY transfer tax rates," for each town you're considering. RPTT is generally paid at the time of closing.

You can find out how much may be owed in back-taxes through the title company. You would also find out about that, and any other issues related to the property, during the closing process.

If you want to estimate how much you would be paying in property taxes, that's a little different. Most people estimate the tax they will pay based on the assessed value (market value) of the property. Since you're in New York, you might also find this FAQ from the New York State Office of Real Estate to be helpful in answering the more intricate questions you might have about property taxes.

Permalink Reply by Debra Monte on August 4, 2008 at 2:35pm

Thank you.