Are you looking to score an investment property for a low price… whether to “flip” it or simply because you love fixer-uppers? If so, one option you might consider is the sheriff’s sale, also known as a foreclosure auction. At these events, you can often get properties for far below their full market value; while the condition of these homes can be variable, there’s no question that it’s a worthwhile option for real estate investors.
For those who have never heard of a sheriff’s sale before, buckle up; we’ve put together a crash course, offering everything you need to know on the subject.
Defining the Sheriff’s Sale
Let’s start with a basic definition.
A sheriff’s sale is a public auction, giving interested buyers the opportunity to bid on foreclosed properties. This happens when the owner of the property is no longer able to make monthly mortgage payments, and thus the property is repossessed by the bank or lender. In order to recover some of their investment in the property, the lender will want to get the home sold as quickly as possible… hence, the sheriff’s sale.
These sales are all local, and typically they are conducted at the county level. They happen pretty often, and the best way to keep tabs on them is to stay in the loop with your county’s sheriff’s department.
What Kinds of Homes Will You Find?
Buyers and investors may wonder: What kinds of property are sold at these public auctions?
The short answer? All kinds of property! You may find single-family home and multi-family homes, but also mixed-use properties and commercial spaces. It’s even possible to find a large shopping center for sale at the sheriff’s auction. Any property on which the borrower can no longer make mortgage payments, may be eligible for sale via public auction.
Where Do the Auctions Take Place?
As for where you can find these sales, it varies depending on the county you’re in, and also how many properties are up for grabs in a given window.
Sometimes, these public auctions are held at the sheriff’s office.
In other instances, they may be held at the county courthouse. Indeed, it’s not uncommon to see these auctions happening right there on the courthouse steps.
These auctions are open to all but be advised that you will be asked to verify you have funds available before you are actually allowed to place a bid.
What is an Upset Price?
If you do attend a sheriff’s sale, one term you’re likely to hear is upset price. This basically refers to the minimum price that the seller is willing to accept, and it may be either more or less than the total amount they need to recover their investment. Note that, if nobody is willing to bid the upset price (or higher), the property will not be sold at the auction that day.
You might also be aware that the lender may actually show up at the public auction to place a bid, hoping to drive up the final sales price. This is a perfectly legal and fairly commonplace thing to do.
Getting Ready for a Sheriff’s Sale
With all of that said, what steps should you take to get ready for a sheriff’s sale?
The first thing you’ll want to do is connect with the sheriff’s department to get a full list of properties that will be up for auction; this information is always made public. That way, you can review the different properties in advance, and potentially even enlist an attorney to help you run a title search.
Also make sure you bring enough money at least to make a down payment, which will typically be 10 to 20 percent of the total sale amount. Personal checks are seldom accepted, so bring cash or a money order. A certified check will also work.
Finally, note that the closing itself may take up to 30 days.
More questions about buying a house at a sheriff’s sale… or about different ways for selling your own property? We’ve got you covered. Follow the SOLD.com blog, and also be sure to request your free seller’s report at your next opportunity.