When a property goes into foreclosure and a sheriff sale date is scheduled, homeowners will rightly feel nervous about the outcome of the auction. If the property sells for more than what is owed on the mortgage, they will receive the proceeds of the sale. This, however, rarely happens, and it is much more likely that the house will be auctioned for quite a bit less than the amount owed on the loan, creating the possibility of being sued after foreclosure for a deficiency judgment. Having an idea of what to expect after the sheriff sale, whether proceeds or deficiency, can help homeowners begin to plan for a future after foreclosure.

The main problem is that of the initial bid amount in predicting how much a particular house will sell for at auction and if the homeowners will receive any proceeds or not. Does the county begin the auction based on the purchase price, or current market value, or balance of the loan? Homeowners with no experience, who are unsure of the value of their property may assume it is the purchase price, but it should be readily apparent that this figure is unrealistic as an auction starting price.

This is because the purchase prices of any group of properties will be all over the map. The purchase price date may have been ten years ago or more, or it may have been less than a year. The longer it has been since the home was purchased, the higher it will sell for in relation to that price, typically, due to appreciation of home values over time. A home purchased in 1984 for $20,000 may be worth $300,000 now, depending on the area and condition of the home, and starting a bid price at $20,000 would make little sense, even if the mortgage was under that figure.

If one examines how much foreclosure properties sell for compared to the market value of the house at the time of sale, this is also very unstable, but a more accurate predictor. During the current foreclosure crisis, certain areas of the country have been high much harder than others, with some neighborhoods declining by 40-50%, while others just a few blocks away may not decline in value at all. A general guess for what a property would auction for compared to its current market value might be around 75-80%. But some areas like Detroit have properties that have sold for just a few thousand dollars ($1-$5,000), and it is very difficult to estimate a market value of any house when no appraiser can walk through or inspect it, as is the case when the homeowners continue to occupy their home until the time of the sheriff sale.

To begin to seriously estimate the current value of a property and what it may sell for at a county foreclosure auction, homeowners may want to obtain a list of recent foreclosure sales from their county and do some research on current market values and sales prices. (Especially when trying to make a point to the county that values have declined and ad valorum property taxes should be decreased, in order to boost property values, the smaller area that is focused on, the more accurate.) Having some date of what similar properties in foreclosure have been auctioned for and possible estimates of current market value, homeowners will be more readily able to predict what price their own property may sell for at the county sale.

Sheriff sale lists can be found at the county courthouse or directly from the sheriffs department. These are the first, most reliable sources of this data that homeowners should rely upon. Numerous foreclosure listing websites also provide this data, but it is quite frequently out of date, inaccurate, or simply incorrect. When focusing on a small area, such as particular city or county, the results of this type of foreclosure research can be much better when official county information is used. Many counties now publish past and upcoming sheriff sale lists online, making the project that much easier.

Foreclosure victims are correct in feeling that they are running out of time when the bank has scheduled a sheriff sale of their home. The possibility of being sued after foreclosure for a deficiency judgment is also a cause of worry (although an unfounded one), but by researching the results of sheriff sales for similar homes, the owners can more accurately know what to expect. Although the chances of receiving proceeds from a sale may be small, and other methods to stop foreclosure should be relied upon long before hoping for a positive outcome of a foreclosure auction, it is always a better idea to be prepared and know the current status of a home, rather than leave everything up to chance.

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