Public sale: A sale of property conducted openly through auction.
Public sale: An auction or sale of property that is publicly held and at which property is sold to the highest bidder.
Public Sale: Bidding on a Foreclosed Property
The sale of property at auction, known as a public sale or a sheriff’s sale, allows all persons permitted to attend to tender bids.
When a homeowner fails or is unable to pay their mortgage, the bank can pursue a foreclosure claim in an effort to recover the loan. Foreclosures reach their conclusion at a public sale, where the property is auctioned off to the highest bidder.
Public sales are conducted in the county where the foreclosed home is located. Public sales can include single family homes, multifamily homes, mixed use properties, larger apartment complexes and commercial buildings. These sales, which are usually advertised on the property, at the county courthouse or in a local newspaper, usually take place one a week or once a month at the county courthouse. Public sales are open to everyone, though the bank may also bid on the property.
At a public sale, the upset price – the minimum amount the bank will accept in order to sell the property – must be met for the property to be sold, though the lender’s attorney will usually bid on the property to bring the price up.
Prior to bidding at a public sale, interested buyers should do a title search if the property either online or at the county courthouse to see if there are any federal or state liens against the property, which can include outstanding taxes or water charges. Buyers should also contact the town to see if there are any open permits on the property that need to be closed.
Interested buyers should also look into the rules of the auction to see how much money needs to be deposited to complete the purchase. Usually, a down payment of 10 to 20% is expected in cash or by certified check or money order.
The U.S. Department of Treasury recommends viewing the property before placing a bid.
“The bidder is invited, urged, and cautioned to inspect the property prior to submitting a bid. Failure to inspect property shall not constitute cause for cancellation of sale. Property will be available for inspection/open house at the times specified by the contractor. Other than the scheduled inspection/open house dates, absolutely no access to the property will be allowed without prior contractor authorization. At their own expense, potential bidders may have property inspectors examine the property during regularly scheduled inspection/open houses.”
Generally, successful buyers are expected to close on the property within 30 days of submitting their down payment. Some public sales, however, are subject to redemption periods, which means that the former homeowner can buy back the home at the purchase price, plus costs and interest, forcing the buyer to relinquish the property.
If a buyer is unable to complete the transaction, the Department of Treasury stipulates that:
“Failure to make required deposit or final payments and/or comply with the time frames specified in the sales flyer and auction site shall be deemed default of the high bidder and may result in cancellation of the contract and forfeiture of any rights, title, and interest the Buyer may have acquired. In that case, title of the property will remain with the Government and will result in the forfeiture of the deposit. If the default occurs because of failure to make the deposit required, the buyer shall be liable to the government for liquidated damages in the amount of that deposit.