What is an upset bid in a foreclosure?

An upset bid in a foreclosure is a process used in the state of Virginia when a property owner is unable to pay off a loan or make mortgage payments. In the foreclosure process, the lender will attempt to sell the house at a public auction, which is usually held by a court appointed representative. If someone other than the homeowner makes a higher bid than what the lender is asking for the property, then this new bidder must “upset” the existing bid in order to purchase the property. Typically, the upset bidder must submit a new bid higher than the current amount, plus a deposit of 5% of the sale price. This new bid must be accepted by the court appointed representative in order to be valid. The upset bid must also be accompanied by a bid bond, which is a type of surety bond that guarantees that the bidder will pay the full amount of the bid if it is accepted. The property owner then has the right to match the upset bid amount up until five days before the foreclosure hearing. If the property owner fails to submit a matching bid, the upset bid will be considered the final bid and the property will then be sold to the highest bidder at the foreclosure hearing.

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