11 Basics of a Sheriff's Sale
How to Buy Foreclosures at Auction
Buying foreclosed property at a sheriff’s sale is one potential way to get a great deal on an investment. There are basic rules for this type of sale that you need to understand before going to the auction. These eleven tips can help give you a better understanding of the process and prepare you to make an educated purchase.
1. What Is A Sheriff's Sale?
A sheriff's sale is a type of public auction where interested buyers can bid on properties.
The original owner of the property was unable to make their mortgage payments and eventually lost the property to foreclosure.
The bank or lender has now regained legal possession of the property by a court order. They are trying to sell the property at this foreclosure auction in order to recover the money they have lost on the property.
Sheriff's sales are not a nationwide event. Rather, sheriff's sales take place locally and are usually conducted in individual counties within a state.
2. What Types of Properties Are Auctioned Off?
At a sheriff's sale, all of the properties that are being auctioned off are foreclosures. All types of properties are up for grabs at the auction including single family homes, multifamily homes, mixed use properties, larger complexes and commercial buildings. The common thread is that they have been foreclosed on.
3. When Do Sheriff's Sales Occur?
Sheriff’s sales occur quite frequently.
You will need to consult with your county’s sheriff department to determine how often they take place near you. However, they usually take place at least once a month, if not every week.
4. Where Does a Sheriff's Sale Take Place?
A sheriff's sale usually takes place in the sheriff’s office at the county courthouse.
Some areas of the country will actually conduct the sale on the front steps of the courthouse rather than inside.
5. Who Can Bid on Properties?
A sheriff's sale is open to the public. It is important to be aware that the lender can also bid to buy back their own property. You must have your certified funds available in order to bid on the property.
6. Where Can You View the List of Properties?
There are a couple of places you can go to view the list of properties that will be auctioned off at the next sheriff's sale. You can contact your local sheriff's office to find out which of these methods they actually use to list properties.
1. Online- Many sheriff's offices have online sites. You can often view the upcoming sales by visiting their website.
2. Newspaper- The properties that will be listed at the sheriff sale will usually be advertised in the local or county paper for about a month before the actual sale. You should contact your local sheriff’s office to find out which papers these sales will be listed in.
3. Sheriff's Office- You can find a list of the properties to be auctioned off by physically going to your local sheriff’s office.
7. What Information Will Be In the Listing?
When viewing the list of properties up for auction, each property will usually include the following information:
- Docket#/ Sheriff#/ Court Case #
- Property Address:
- Upset Price
8. What Is an Upset Price?
At a sheriff's sale, the upset price is the minimum amount that the plaintiff will accept in order to sell the property. If the bids do not meet this amount, the property will not be sold.
The upset price could be lower or higher than the actual judgment amount. The plaintiff’s attorney will usually bid on the property to help drive the price up.
9. Is There Anything You Should Do Before a Sheriff's Sale?
If there are properties at the sheriff sale that you are interested in bidding on, before the sale, you should do a full coverage title search on them. Some areas allow you to conduct this search online, while in other areas, you must conduct the search at the main court house.
You will want to see if there are any liens against the property on a Federal or State level or by the IRS. This could include taxes or water charges. You could be responsible for paying any of these liens that were not wiped out during the court proceedings. Instead of doing this title search yourself, you could also hire an attorney to do it for you.
You should also contact the town or municipality where the property is located to find out if there are any open permits on the property. If you purchase the property, you would have to spend money to close out any open permits.
10. How Much Money Do You Have To Bring?
The amount that you must bring to a sheriff's sale will differ depending on the amount of money you are willing to spend on a property, as well as the amount of down payment required. The amount you must put down after a successful bid will differ, so check the rules of your local sheriff's sale. Some towns will require you to make a down payment of 10% of the bidding price and others will require 20%. The funds must be cash, certified check or money order.
As an example, a sheriff's sale requires a 10% down payment on successful bids. The most you are willing to pay for a property is $180,000. Therefore you must bring proof of funds of $18,000 to the auction, which is 10% of the purchase price.
11. When Do You Have to Close on the Property?
Again, this will depend on the rules of each individual sheriff's sale. You will usually have to close on the property within 30 days of successfully bidding on the property and submitting your down payment. Some sheriff's sales require you to close on the property sooner than 30 days and others have a closing period of longer than 30 days. Many sheriff's sales will publish these rules online or you can call or go to the sheriff’s office for the full list of requirements.