Why Sheriff Sales are passé

By
Real Estate Agent with Keller Williams Real Estate

What's the story with Sheriff Sales in Philadelphia?

 

Twice a month long lines form outside the Auction room at the offices of the Sheriff of Philadelphia, John D. Green.

 

The circumstances are rather unfortunate: All assets for sale have been taken away from their owners as a result of mortgage payment default or delinquent real estate taxes, despite repeating warnings from authorities.

 

Once the RE asset reaches the Sheriff's hands, the Sheriff will attempt to sell it at an attractive price. 

The majority of the bidders are RE investors that will purchase the property on the spot, despite not having seen the interior of the house or witnessing its condition. Some investors will buy to fix and flip and some will buy, fix up and hold to generate passive income from tenants.

 

Now, even though Sheriff Sales might seem like a win-win, they do pose a serious risk.

 

The Sheriff will clear any title issues pertaining to creditors with interest in the prop; however some will not be covered by the Sheriff: this goes for IRS liens or environmental damages which can become a very costly mess.

 

Reviewing the title record using a title search is the most effective way to expose future obstacles. However, many title companies are reluctant when asked to insure a Sheriff sold property.

 

It is also important to remember that owners, who lost their property at a tax sale, have the right to regain ownership of their property if their debt was paid off in 90 days from sale date. So theoretically, an investor who took hold of the prop, rehabbed and rented it out might have to turn it over to the original owners at the end of 90 days or before, at no compensation.

 

The good news: not only the Sheriff supplies the good deals. Today's slow market places the Buyers in a strong position and signals opportunities. Interestingly enough, foreclosed properties that weren't successfully sold by the Sheriff will normally go back to the bank's possession and will be marketed in the open real estate market by a licensed RE agent. Only now it will feature free and clear title complements of the Sheriff and will often be offered at a price lower than market value, possibly even lower than the minimum bidding price at the auction. 

The Sheriff will undoubtedly continue to provide steady flow of investment properties, but if it's quality for the price you're after, you better keep your eyes on the big picture. 

The next great bargain might be right under your nose!

 

**Due to a moratorium on mortgage foreclosure sales requested by City Council , the sheriff has postponed the sale scheduled for April 2008. Please be advised that Auctions' dates and times should be verified.

 

Disclaimer:

This article was written as an opinion and does not constitute legal advice.

© All rights reserved to Odelia Aminov, 2008

 

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