Sherriff Sales
Sherriff sales and tax sales are handled differently across the country. You need to check with the laws in your state to see how they are handled. The following information is for Sherriff Sales in Columbus Ohio. This should give you an understanding of how they work and give you some insight on things to watch out for.
Sheriff sales are used by lenders to sell off their non performing assets after they are foreclosed on. These types of sales are usually held on the steps of the courthouse or in a private meeting room in the courthouse. One sale I went to in a small county was actually conducted in the basement of the courthouse in a hallway.
I write this after having attended these types of sales every week for over a year. Here is what I have learned. Now I must tell you again that this is for the state of Ohio. Like I said previously, you need to check with your state and even try calling the county Sherriff’s office in your area. Here is how it works:
WHAT IS A
SHERRIFF SALE?
This is where foreclosed homes are sold off in an open auction format.
WHERE TO
FIND A LIST OF SHERIFF SALES:
The homes going up for sale are advertised every week for 6 weeks prior to the sale. In our market there is a legal newspaper that publishes the sales and they are posted on line as well. I use the paper because I can make notes right on the paper while driving by the properties. The listing will give you all the legal jargon about when the sale is going to be, the case number, the address, the sheriffs appraised value of the property and the deposit amount required at the time of the sale. Tip: I would find out where the sales are held in your market and visit the sale for a couple of weeks to get an idea of how it works and what the common etiquette is at the sale so you don’t look like a fool.
HOW TO
NARROW YOUR SEARCH #1
Sometimes this list of properties can be overwhelming. Here is how I narrow it down. Look for a price range that you are comfortable with and highlight those on the list. Further narrow it down by picking out properties in areas of the City that you are comfortable being in. Areas that you are familiar with, and specifically an area that you feel comfortable spending time in. If you plan on fixing up the property yourself you could be there a while fixing it up…..
HOW TO
NARROW YOUR SEARCH #2
To narrow the search further, I actually drive by the properties to get a general idea of the immediate area, the overall condition of the exterior of the property and specifically to get an idea of the fix up cost. I look at the roof, the garage, sidewalks, windows, etc. to get an idea of condition. You have to determine how much work you want to put into a property and how much money you have to work with. Make notes as you drive the properties. This gives me a good idea of the top 5 to 10 properties that I want to research further. More research? You bet!
HOW TO
NARROW YOUR SEARCH #2
After you have narrowed the search to the ones you like, you will need to find out how much is owed on the property. This could be just a first mortgage or it could be multiple mortgages and liens on the property. Not knowing this can be deadly. In our state the Sherriff sale does not eliminate all the liens on the property. If there are other liens or mortgages on the property, they can come after you after the sale. An acquaintance of mine purchased a property at the auction, rehabbed the property, rented it out, and then went to sell it. The title company did a search and found several mortgages on the property. Those mortgage holders were not interested in releasing their lien on the property nor were they interested in selling the lien for pennies on the dollar. He ended up having to file bankruptcy to get out from under it. Make sure you know what you are doing. You can actually go down to the courthouse to research the liens and mortgages on the property. You can also contact a tile company and they will do the work for you. It may cost $100 or so but it is worth it.
Another reason you want to research what is owed, and specifically what the foreclosure amount is, is because this is likely what the banks representative will be bidding on the property. You see in this state, if the home had an FHA loan on it, it is insured with FHA. Therefore, the bank will send their attorney to the auction to bid for them. The attorney will bid up to what is owed on the property. You see if they take it back and have to hold onto it for a while longer, that’s ok because they can turn around and get all their money back after giving it to FHA. FHA will then turn the property over to HUD to sell. This is how a HUD home is born.
BE PREPARED
So you have done your research down town and you have driven by the properties to narrow your search and you have gone to the courthouse and know what is owed on the home. There is more: you need to know what the home would sell for or what it would be worth after you fix it up. Also, I would want to know what it would rent for. (So I can fix and rent). There are several websites designed to help you figure out the market value of a particular property, or you can call a local Realtor friend that can do this for you. It would also be important to drive by the comparable homes (homes that have sold and homes that are actively for sale that are similar). Now you know what you are doing!!!!
GOING TO
THE SALE BE PREPARED!!
Of course you will need to find out how much money you will need as a deposit for the sale and in most cases this needs to be in the form of a money order or certified check. Be prepared! Take more than you need. You may end up buying more than one home at the sale.
Just remember you cannot move forward until you do something. Just do it! Get started today!
