Question: I have read your columns for years but especially the last two weeks. My best friend’s house was sold at a foreclosure auction on Dec 4. The amount owed was $263,000 as of Sept. 1. Her house has an assessed value for property taxes of $201,000. On Dec. 5, people started showing up at the house and today there is a For Sale By Owner sign in the window. I am sure the house could not possibly have sold for $263,000; it needed a lot of work. In last week’s column you said if the bank’s bid was not met that they would retain the house as a bank-owned property. Is there an escrow closing on these homes? It just seems really fast for a new owner to have taken possession. One day? I am worried about a scam — the house is next door to me. How would I research this information? I have checked the Snohomish County Web site and have not seen a change in ownership or a sale posted there. Thank you for any guidance you could provide.

Answer: I am getting a lot of letters about foreclosure sales lately, which is unfortunately a sign of the times.

In last week’s column I explained that when homeowners stop making their mortgage payments and the bank forecloses, they have 90 days to come up with the money to pay off their outstanding mortgage balance plus accrued interest, late fees and foreclosure expenses.

Typically this happens when the owners sell the home during the 90-period between the notice of trustee sale and the sale of the home at a foreclosure auction on the courthouse steps.

If homeowners owe more money than the home can sell for in today’s housing market they can request that the mortgage lender accept a short sale, which means that the lender is willing to accept a pay-off at closing that is less than the mortgage balance.

If the homeowner can’t sell the home before the foreclosure auction, it will be sold to the highest bidder at the auction. The foreclosing lender typically opens bidding with the amount owed on the mortgage. But a real estate investor contacted me after reading last week’s column to say that because of the drop in home values, lenders now often open the bidding as low as 80 percent of the amount owed on the mortgage balance.

This is done to encourage bidding. Lenders know that they can’t sell a home for more than it’s worth, so they are willing to accept a discount at the foreclosure auction rather than take title to the property and try to sell it themselves.

So that may be what happened to your friend’s house. The lender may have accepted a bid at the foreclosure auction for significantly less than the $263,000 owed on the mortgage.

As I explained last week, when an investor buys a house at a foreclosure auction he or she must pay the full purchase price in cash on the spot and they immediately take title to the property. So it is possible for an investor to buy your friend’s house at a foreclosure auction on Friday and put it up for sale the next day.

The change in ownership should show up on the property title records at the county recorder’s office within a couple days. It’s likely that this is a legitimate foreclosure sale, but since the house is next door to you it’s worth keeping an eye on the property records to make sure that there is nothing fishy going on.

Mail your real estate questions to Steve Tytler, The Herald, P.O. Box, Everett, WA 98206, or e-mail him at economy@heraldnet.com.