the house i am looking to buy is up for auction soon (for the 3rd time, after twice being postponed). as i've mentioned in previous posts, it has two lien holders, Wells Fargo and Chase. 1st lien and costs, which typically makeup the opening bid on an auction are significantly above market price.

i understand that cost of foreclosure is prohibitive for banks, thus they wish to avoid it. (would anyone have any idea what marginal foreclosure cost is not yet incurred by the bank by the house being auctioned and "sold to the beneficiary" which is to say the 1st lien holder and then the property turned REO and sold immediately (take that part for granted).) but then other than foreclosure and REO costs to the 1st, the 1st have to buyout the 2nds for a short sale prior to auction. which scenerio costs more? depends upon how much does the 2nd wants and how many licks to the center of a tootsie roll tootsie pop?

i am thinking the 1st lien holder may want to execute a "sold to beneficiary" at the auction if i engage them at their price plus some costs of foreclosure. this would require some deal avoiding the LA who represents the current owners who want a deal made with the 2nd lien holder for short thus avoiding tax consequences of full foreclosure.

but then, i really don't know (?) where in the foreclosure a house is when it is prior to sale at auction and then after when it is "sold to beneficiary" at auction.