Sheriff Sales

Sheriff Sales

Definition

Auctions at which foreclosed homes are being sold to the highest bidder. Usually conducted at the county level. Proceeded by a formal legal notice to the public.

What is a Sheriff Sale

Sheriff Sales

A sheriff sale foreclosure is an auction where mortgage lenders attempt to auction off properties that are in default. Sometimes borrowers run into tough financial times that result in them being late on their payments. Because of this, the lender starts the process of preforeclosure and then foreclosure if the borrower cannot bring the loan current.

These sheriff sales allow lenders and other kinds of financial institutions to recoup their money when a mortgage goes into default. Not every property sells at these sheriff sales, however. Some will revert back to the bank as an REO (real estate owned) property.

Sometimes, people get confused over the difference between sheriff sales and tax sales. A sheriff sale results from a person defaulting on their monthyl mortgage payments while a tax sale is specifically focused on selling properties that have tax liens against them.

How Does a Real Estate Sheriff Sale Work?

Sheriff sales are normally conducted in states that have judicial foreclosure. These states must go to court to complete the foreclosure process. Non-judicial foreclosure states simply auction off foreclosure properties on the courthouse steps in most cases. States that use sheriff sales are required to have a sheriff present to administer the sale of the foreclosed homes.

Here are some things you need to know about purchasing houses at a sheriff sale:

  • You are buying the property "as is". This means that you have not had a chance to see the property up close and personal. You will not be able to get access to the interior of the home before bidding, so you really have no idea what you are purchasing. Since you cannot get inside of the home, you also have not had it inspected. This means you could easily be buying into serious cosmetic and functional issues. Homes that sell at a sheriff sale or courthouse steps auction are a gamble.
  • Base your bid on some worst case scenarios as far as the home's condition is concerned. Since you cannot go inside in most cases, assume that it needs carpet, paint and many of the other typical repairs. You should be able to do some preliminary research of the tax records to at least get an idea as to the square footage and such.
  • Have a maximum bid in your mind based upon your numbers, and do not go beyond it. This is your best protection against overbidding. Since you have no idea whether the property may have other issues such as electrical, plumbing or even foundation problems, you really cannot plan for those things.
  • Starting bids at auction can be quite high as they typically cover the amount owed on the property as well as any outstanding fees, legal or otherwise. You may also need to inquire about other liens (such as tax or mechanic's liens) against the property. You don't want to find out what you purchased a property that has a lot of additional debt against it.
  • At least try to drive by the homes you are interested in before a sheriff sale. Seeing it from the outside is better than not seeing it at all before bidding.

The Process of Purchasing a Home at the Sheriff Sale

Each jurisdiction has its own rules and regulations as it relates to purchasing homes at the sheriff sale. Buying real estate at a sheriff sale starts with the sheriff stating the starting bid which was given by the lender's representative. People who are attending the sale will start to make bids on the property. This can be investors, attorneys and even the mortgage lender. When the highest bid is placed and no one outbids it, the auction is over. It can often end with the lender claiming the property so that they can resell it as an REO later.

Most sheriff home sales require that the bidder pays the purchase price on the same day as winning the bid. That means that the bidder must have access to the cash so that they can deliver a cashier's check within a few hours. They will also receive the deed to the property at that time. Sometimes, there are additional fees due to the sheriff who held the sale.

In some states, the payment does not have to be delivered the same day. These states typically require at least 10% down at the sale with the agreement that the buyer can provide proof that they can get a mortgage accepted within a particular period of time. This can be difficult since they have not yet seen the inside of the home or had an inspection done. These issues can prevent a mortgage from being approved.

A Title Search for Any loose ends

It's important to do a title search on foreclosed homes since there can be other liens that are against the property. As a buyer at a sheriff sale, those other liens can be passed on causing additional debt that was not expected.

When investing in foreclosure properties, there are a lot of unknown factors that can trip you up. This is why is it critical to do as much homework on these houses as possible. Before you buy sheriff sale homes, learn how to investigate the title and tax records to your advantage. Thankfully, these items are easily studied because the government keeps these records at a local level.

Finding foreclosure sales in your area does not have to be difficult. The local legal newspaper is required to advertise these homes several weeks in advance of a sale. For that reason, it can be a bit difficult to keep up with the upcoming sales since you may be looking at different areas at the same time. ForeclosureDeals.com is a great place to find all of the information on these investment opportunities all in one place. Instead of wasting time and gas driving all over town, or reading several different newspapers, you can simply use your mouse to click a few buttons to get the same information.

FAQ about Sheriff Sales

  • Sheriff sales are held when a lender files suit to recover losses sustained when a homeowner defaults on a loan. If the court rules in favor of the bank a judgment is issued and the property is scheduled to be sold at public auction. The sheriff sale is scheduled to take place in the county where the real estate is located. Usually, a list of foreclosed properties at a sheriff sale is advertised in the local newspaper 6 to 8 weeks prior to the sale. Listings of foreclosed properties are also made available at the county courthouse. Once you make the decision to attend a sheriff's sale, do your homework. There are no guarantees or warranties and you will not have an opportunity to inspect the property before you bid. Do some research of the property listing before the auction to make sure it is the home you are interested in. Keep in mind that during the auction, most of the real estate is bank owned and other banks or individuals looking to invest will also bid. There will be a minimum bid usually set by the bank or Mortgage Company.

    If you win a bid prepare to pay with a cashier's check because you will be awarded the deed to the real estate very quickly if not immediately. Once you sign the deed you will be expected to pay the full amount of your winning bid.

  • Sheriff sales are held in the county where the property is located. Usually taking place at the courthouse.

  • A Sheriff sale is the process of selling the property of an individual or entity who has defaulted on a mortgage. The lien holder of the property must file a writ or court order in an attempt to end the homeowners right of possession thus, authorizing the sheriff sale to recover their investment. The court order is proof that the lender or bank owns the rights to sell the property. Once approved, on a specified date the property is put up for auction. The Sheriff sale is then conducted by an official of the county or city government, usually the Sheriff, although laws vary state by state. A Sheriff sale may include homes or commercial property. A sheriff sale is different from a Sheriff tax sale. The difference is, a county government may impose a tax lien on a property that is delinquent on property taxes. After sufficient notices or warnings from the governing entity, the property may be seized by the governing entity and sold at auction or a tax deed sale for the amount of taxes owed. An individual may buy by bidding on the property at auction.

  • That depends on several factors. First, you must determine the purpose of your bid. The obvious reason would be an eventual return on investment (ROI). If you are a novice at investing in real estate, sheriff sales could be a great place to start. Consider this: buying foreclosed property sold at a sheriff's sale or auction are, by and large, priced way below market value because lenders are only attempting to recoup losses on their original investment. Because sheriff sales are largely ignored by the general public, competition is minimal and it's a safe bet that you will be able to find some great properties at an incredible price. However, sheriff sale homes come without warranty. Due diligence is paramount. Beyond that, a great find could be realized not just locally, but at sheriff sales across the USA.

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