Can someone explain to me what happens at a sheriff’s sale…or direct me to a site that will? My County’s website doesnt really explain much except when to show up.
Thanks!
I spent an entire season attending Sheriff Sales in South Jersey. I bid on a few properties and even “bought” one.
The general process :
- Research the property you are interested in. The sheriff’s office WILL NOT HELP you. It is very common for investors to buy a property that they have never been inside since most owners are not interested in letting you tour their property.
Do some initial due diligence at the county court house to see if there are liens that won’t be wiped out by the sale (IRS liiens, etc) ro if there are other proplems like toxic waste, in ground oil contamination, etc that will remain with the property if you buy it.
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Decide your top dollar price. Be realistic with yourself and the value of the property TO YOU.
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Find out the funding requiremetns for the sheriff sale. IN SJ you must put down 20% in certified funds immediately upon winning the bid. This means if your winning bid is $100K, you must provide the clerk with a cashier’s check (or cash) for $20K IMMEDIATELY upon being decalred winning bidder. Most experienced biddewrs bring several cashier’s checks adding up to 20% of their highest planned bid since the clerk’s office will not give you change on a cashier’s check that exceeds the 20% down payment. For example: You had planned to bid up to $100K for a property but your winning bid was less than $100K. Be prepared with 3 $5K and 5 $1K cashier checks so you can give the clerk exactly 20%.
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If you find one or several properties you expect to actually bid on, it is a good idea to get a title search doen so you are absolutely aware of show stopper problems that you did not uncover in your own research.
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Show up and bid. In SJ, the auctions are open bidding. This meansthe clerk simply bids up the price in an open forum untill all lower bidders drop out. Highest bidder wins.
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assuming you win the bid, the owner (in NJ at least) has 10 days to redeem the property (pay off the mortgage and keep the property). This happened to the property I bought and I didn’t get my 20% down payment back from the sherifff’s office for 3 months
jmd_forest
The remaining 80% is due in certified funds within 10 days of the auction.
Tgis means there is very little opportunity to arrange financing after the fact. Have your financing arranged before you bid.
WOW! Thanks so much for the info. I did find out that I will have to have 100% paid in full at the time of sale. SO, your suggestion of having multiple checks was wonderful. I was wondering how to do that without knowing exactly how much the bid would go for.
Do you think it’s necessary to having a real estate attorney involved?
Thanks again
Harblack
In my opinion, a real estate attorney is a waste of money. In my opinion, a cooperative title company who can research the property before the sale and provide an insurance committment before the sale is what is important. The insurance means the title company will defend you against any claims to the property.
Even so, you assume the risk of buying a propert (most likely) sight unseen and in unknown condition. Not much a lawyer can do for you before the sale that the title company can’t do, again in my opinion.
Do yourself a favor and attend a few sales before the property you are interested in is actually up for auction. You’ll probably see a core group a just a few people who buy most of the properties.