Buying a repossessed property through a Sheriff’s Sale It can be a great way to acquire a property, either to live or as an investment. Of course: these types of sales are not the same as the most classic ones in the real estate market, but understanding how they work could help you save on the purchase of a property and perhaps even make a profit on it! Let’s see what this is about.
- 1 What is a Sheriff’s Sale?
- 2 What types of properties are auctioned at a Sheriff’s Sale?
- 3 Where are the Sheriff’s Sales held?
- 4 How to see the list of available properties in a Sheriff’s Sale?
- 5 What does “modest price” mean at a Sheriff’s Sale?
- 6 How to prepare to buy a property?
- 7 How much money do you need to attend a Sheriff’s Sale?
- 8 When does the sale become official at a Sheriff’s Sale?
What is a Sheriff’s Sale?
In this scenario, the lender takes legal possession of the property. In order to obtain the money corresponding to the debt, this lender (which could be a bank, for example) puts the property up for sale and collects the outstanding balance of the mortgage.
Sheriff’s Sales are held locally, which means that they are advertised within the same county and believe it or not, they are carried out quite frequently. You can check with your county Sheriff’s Department to find out when they will take place., but usually, it’s once a month. In some towns, the Sheriff’s Sales are held every week, but it is not usual.
What types of properties are auctioned at a Sheriff’s Sale?
Any type of real estate that can be mortgaged and that meets the specific requirements, that is to say, that they belong to an owner who has been late in paying his mortgage and who has stated that he cannot take care of it.
There is a wide range of properties that you can find in a Sheriff’s Sale, from single-family homes to multi-family homes, hotel complexes, commercial buildings, premises, among others.
Where are the Sheriff’s Sales held?
These types of sales are usually held at the county Sheriff’s office or courthouse. In some areas of the country, they could be held in the vicinity of the court, rather than on the premises. The Sheriff’s Sales are open to the public. Lenders sometimes attend the sale or send a representative who tries to buy their own property and then put it up for sale at a more lucrative price. It is important that you know that this type of action is not prohibited.
Yes indeed. There is one factor that you must take into account if you want to participate in a Sheriff’s Sale: all participants must come with certified funds that are large enough to be able to bid on a property.
How to see the list of available properties in a Sheriff’s Sale?
You can go to a couple of places to explore the different properties that will be auctioned at the next Sheriff’s Sale in your county. Many Sheriff’s offices around the country have their own website and there they publish the list of auction properties. You can also get the complete list by visiting the Sheriff’s office and asking for it in person.
What’s more, the properties available in the auction are also usually advertised in the newspaper with the largest circulation in your area. When? Up to one month before the auction takes place. If you want to know which newspapers your county uses to make these announcements, don’t hesitate to contact the Sheriff’s office.
Note: Each property for sale will include a docket number, county file number, or court case number. It will also indicate who is the plaintiff of the foreclosure, the address of the property and a brief description of the property. Here you can also find a modest price, which will be the minimum amount that the lender hopes to get from the auction.
What does “modest price” mean at a Sheriff’s Sale?
The modest price is the minimum amount that the plaintiff (which is usually the lender) will accept for the property. What does this mean? That if the offers do not reach this amount, the property will not be sold to any bidder.
However, this price can be higher or lower than the amount of the debt, which would be the amount of money the lender is entitled to recover to cover its losses. The plaintiff’s attorney or other representative may bid on the property to try to raise the price.
How to prepare to buy a property?
The first step in preparing for a Sheriff’s Sale is perform an exhaustive search on the title of the property or all the properties that have caught your attention from the listing. Some areas of the country allow citizens to do this check virtually through a web page, while in others the file must be requested at the main court. If you wish, you can hire a lawyer to help you verify the legal status of the property.
But what does this legal status comprise and why is it important? The answer is simple: this search will help you determine if the property has some lien at the state or federal level. What liens could you find? For example, a note imposed by the Internal Revenue Service (IRS or Internal Revenue Service) or even liens for debts of the drinking water service.
If you acquire the property with a lien, you will have to take financial responsibility for it. That is why it is important to check if the only lien exposed in the file is that of the mortgage creditor or if there are also other debts associated with the property.
Also contact your city or county authorities to find out if there are any open permits on the property. If so, take into account that you will have to invest money to close them in case win the auction.
How much money do you need to attend a Sheriff’s Sale?
This will depend a lot on the amount of money you are willing to pay for the property and the modest price that has been placed on the property. The amount you must pay may vary depending on the location, so check in advance how much is the square meter, on average, in the place where the property is located.
The amount of money you must bring to the Sheriff’s Sale also has to do with the down payment. Some cities require an initial payment of 10%, while others set this limit at 20%. Funds must be submitted in cash, certified check, or money order. Personal checks are not usually accepted at these types of sales.
Let’s see it in an example. If the Sheriff’s Sale requires a 10% down payment and the most you would be willing to pay for a property is $200,000, you must bring proof to the auction that you have $20,000 in available funds or at least that 10% of the final price of the purchase. If the sale closes at $180,000, we would be talking about a payment of $18,000.
When does the sale become official at a Sheriff’s Sale?
This will also depend on the rules established for the sale in each county or city, but generally, it is at any time within 30 days of the auction and the sending of that initial payment. However, it is important that you know that some cities handle much longer periods.
For more details about the sale, Be sure to check out the Sheriff’s website! Possibly, the portal contains the rules of the auction, including the deadline for the closing of the sale and the signing of the contract.