Can you buy at the Sheriff Sale and make a lot of money? Yes and no.
If you want to do this there are a couple of things that you need to know. This list in by no means complete, but it is a good start.
· Usually, the bidding starts at 2/3 of the Sheriff appraisal. This valuation is completed by three appraisers chosen by the Sheriff and is a Drive By Appraisal only. They do not get inside and have no idea if the plumbing is ripped out or if the basement is flooded.
· Buyers are buying AS-IS and With All Faults
· The deposit needs to be in certified funds. No checks.
· You probably can’t get in to the property before bidding.
· There are no keys at closing.
· If there is someone in it when you take title, you get them too. Removal of the occupant may require a Writ of Possession and a forcible removal.
· You may be bidding against the bank and they have the right to bid up to the amount of their debt. They may back off early or the debtor may have equity, so there is an opportunity.
Now that you know a couple of the potential problems, consider these steps to help protect yourself a little bit.
- Read the foreclosure file at the courthouse. It is a public record and available by request. Typically there is an area to read through it right there.
- Look for evidence that the lender has obtained title insurance.
- Do a quick lien search and find out what else you are up against. There may be more than just the bank. IRS liens might not strip off. This can be hired out to a professional searcher at the courthouse for a fee or you can do it yourself. You are already at the courthouse anyway.
- Go down to the sale for a few weeks before bidding yourself and just watch. There are guys down there that do this for a living. Some of them, at least here, are willing to answer a couple of questions. Just don’t bother them while they are bidding.
- Give a call to the water department. Here, the sewer and water bill follows the property. It may be another lien that you will need to pay.
I could write a book here, but it should be known that buying at Sheriff Sale is a BUYER BEWARE purchase. You may get a discount as would be expected for taking the risk. You may also get hung up on a detail that you didn’t know about.
RULE # 1 AT SHERIFF SALE IS IF IT SOUNDS TOO GOOD TO BE TRUE AND THE PRO’S ARE NOT BIDDING, THERE IS A PROBLEM.
Richard F. Kruse is the President of Columbus, Ohio based Gryphon USA, Ltd. (www.gryphonusa.com). The Gryphon Organization includes Gryphon Asset Management providing receivership and consulting services in the distressed marketplace, United Country Ohio Realty & Auction Group (www.ucohiorealty.com & www.ucohioauctions.com) providing real estate brokerage and auction services throughout Ohio and OnlineAuctionUSA.com (www.onlineauctionusa.com) providing commercial asset liquidations from the Midwest to East Coast.
United Country Ohio Realty & Auction Career Opportunities Available. Call 614-885-0020 x 17
;)
;)
Great subject and a very good start.
I’ve looked at your home page, readers should know who you are and that the differences I point out are not disagreements but varying perspectives.
It’s been my experience that the lender will almost always bid the property in at their balance plus accrued interest, fees, and cost. Two exceptions are in states that allow the bank to sue for the balances and when the debt way exceeds value.
Not only do deposits need to be in certified funds, but they are often for the full amount of the bid!
About title, if the lender is using a foreclosure service, they will already have a preliminary title report. If the report doesn’t exist get a "property profile" from your title company (Professionals have a favorite title company, if you don’t have one you shouldn’t be playing with foreclosure auctions!)
If the lender or their attorney are representing themselves I have only two words of advice: "Cavite Emptor!"
"Go down to the sale for a few weeks before bidding yourself and just watch. There are guys down there that do this for a living. Some of them, at least here, are willing to answer a couple of questions. Just don’t bother them while they are bidding." Great advice, please redo it in bold type!
"Give a call to the water department. Here, the sewer and water bill follows the property. It may be another lien that you will need to pay." More great advice! Please add, garbage services, and property taxes, and while your talking to the local government check on usage you may find out your duplex or mixed use building isn’t.Foreclosure sales are a great place for the rich to get richer, and the foolish to get fleeced.
If you’re still less than rich and you want that house locate the seller! The seller has the right to redeem the property even if the loan can’t be, right up until the auction starts. You may pay a little bit more to get the seller to cooperate but it’s better and surer than bidding! And, the seller can normally get you inside.
One final thought, many of these properties end up with the lender, in my book "One House At A Time / Finding and Buying Single Family Rentals" I write about one deal where we had the bank on the phone during the auction and when the gavel fell I wrote the price in a prepared sales agreement and faxed it to the bank less than 15 minutes from the sale we had the house under contract, the neighbors who were going thought their REALTOR® are still grumbling.
We should point out that both of us are writing about foreclosures by first lean holders, forecloses by subordinate lean holders are a whole different and exciting ball game!
Bill
William J Archambault Jr
The Real Estate Investment Institute
http://www.reii.org