You may remember the post I did about the bank bidding way too much on a condo unit that smelled like pee and was tenant occupied. Well I got word that the tenant had moved out. All of a sudden, the price sounded much more reasonable!
Since it was after auction, the only way to be able to bid would be to ask the judge to reopen bidding at the court confirmation. In the past, I was always told it was very hard to get a judge to reopen bidding. You had to provide a very good excuse for why you weren't at the auction in the first place. (Even worse, I was in attendance but did not bid.) I was also told that IF you could convince the judge to reopen the bidding, your bid must start at 5% above the highest bid at auction.
Several years ago I attended a court confirmation where the bidding was reopened. The bank had failed to send a representative to the flagpole, so the winning bidder (ME!) had gotten the property for well under what was owed. The bank did not have to beg or plead, the judge reopened bidding and the bank outbid me by well more than 5%.
With this old knowledge, I contacted the commissioner to find out when court confirmation would be. She informed me I would need to bring 10% more than the high bid at auction. WHAT? I learned that this amount is not a standard rule, but rather is set in the Findings of Fact and Conclusion of Law that the plaintiff's attorney files during the foreclosure process. Okay, fine. For this one the amount to bring needs to be 10% above. She also tipped me off that someone else was planning on asking to reopen bidding. Yikes! At 10% above the bank's bid, plus competition, and not knowing what kind of condition the tenant left it in, this unit had once again become too pricy for me. But I had to know more so I attended the court confirmation anyway. (Anyone can go watch a court confirmation! I encourage you to. I find them fascinating.)
This confirmation hearing was in front of Judge Kim. I met him years ago when he was doing commissioner work. He was the most conscientious commissioner and works hard to make things fair for the borrower in default. With that in mind, I was curious how he would handle a request to reopen bidding. I was not surprised at all when, after first asking the plaintiff's attorney and the commissioner to state their names, his very first question to the commissioner was, "has anyone contacted you with plans to reopen bidding today." There was no begging or explaining why he missed the auction. The commissioner indicated the new 3rd party bidder, and Judge Kim called a recess and asked them to go to the flagpole to reopen bidding. Of course I tagged along! Back down the stairs, through security, and outside we went. Bidding was reopened by the commissioner. The new bidder bid exactly 10% over the bank's bid, handed his cashier's check for 10% of that over to the commissioner, and back inside we went, back through security, and back up the stairs. We had assumed Judge Kim would take another case while we did that and we would need to wait, but when we re-entered the court room it seemed they had put all cases on pause to wait for the bidding. The confirmation hearing was promptly resumed, and the new 3rd party bidder was confirmed.
Lessons:
Check the Findings of Fact to know what % over auction bid price you'll need to bring to start.
Whether or not reopening bidding is easy or allowed will depend on the judge.
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