Making Money At The Sheriff Sale
I regulary purchase pre-foreclosure properties, however I have not bought any properties at a Sheriff sale.
If most (or all) of the Jr leins are eliminated when a property is sold at auction, what road-blocks should an investor be on the look-out for.
I appreciate the feedback from my fellow investors!
BAMZ
Is the sheriff sale for taxes of foreclosure?
The Sheriff Sale is referring to Foreclosure. I happened to research the sales that scheduled for this month and the equity spread (one the leins dropped off) was quite large.
I my local area there are about 500 Foreclosures per year. I have been successful reaching only about 10% in the pre-foreclosure stage. So there is another 450 possible opportunities that I could purchase at the Sheriff Sale.
So to my fellow members here at TCI who have purchased properties at a Sheriff sale, what are the main roadblocks that investors should be aware and alert for?
BAMZ
BAMZ,
I think it's just the opposite - 10% of all file foreclosures end up at the sheriff's sale. Most of them either either declare BK or dispose of the foreclosing client through the help of the investors that are besieging them from the day foreclosure notice was published.
In Illinois, I believe the only liens that survive a sherriffs sale is the water bill, demolition and tax bills. Beyond that, take a cursory look at the title through the county records system. If you see anything "scary" research it.
The drawbacks to a sherrifs sale is you rarley have an opportunity to really inspect the property and you are getting it as is. This is very important especially if you have concerns about environmental issues. Also, you generally have to come up with full payment in 48 hours. This may become difficult especially if a property is listed for a certain date and then postponed for any number of reasons for another date.
In essence the biggest roadblock is lack of inspection and having the available capital.
Hi and thanks for your response. However, I am not debating the percetage that end up at the foreclosure sale, I was simply stating that I personally reach about 10% or 50 per year Before the Sheriff Sale.
So for my fellow members Who HAVE purchased properties at a Sheriff sale, what are the core road blocks or pitfalls that an investor should be alert for to purchase properties at the sheriff sale? Especially regarding the title and what leins if any would be carried over?
BAMZ[ Edited by BAMZ on Date 10/02/2003 ]
I have found a house that will be going into foreclosure and the lenders have been nothing short of easy to try to negotiate with based on the flurry of paperwork that never seems to get to where it needs to be. The house has a first and a second. When it hits the courthouse steps.
1. Where will the bidding start
2. Will I need all cash to purchase the property or will I need 10% and have thirty days to pay the rest?
3. Does question #2 vary from state to state...I'm in GA...does anyone know the standard operating procedure in GA if it is state specific?
Any help would be GREAT!!
one thing to check is prior mortgage liens, federal tax liens and any other judgement liens that have priority to the one that is foreclosing.
Hi lp1,
I appreciate your feedback. Besides Federal Tax Leins, what other leins would have priority if the first mortgage is foreclosing?
BAMZ
Everything you ask can be answered by one phrase, "It varies from state to state"
The financial aspect is easy to answer. Call the Sheriff's dept handling the sale and ask how and when the payment is due. They may also have some other pertinent information. If memory serves me correctly you need 10% on the sale date and the balance (90%) within 24 hours.
The super-liens can be answered by a Lis Pendens attorney who is active in the area.
Super priority liens generally are Federal,State, and Municipal obligations. Depending on the state, mechanic liens may have priority. There may be some exotic liens such a RICO (Dept of Justice) or child support liens. Obviously any thing recorded before the second mortgage (if that's who's foreclosing) will remain.
My advice is to go to several sales before you put your money where your mouth is. You will see a small group of players (read pirates) who will actively bid on mucho properties. I don't think they will befriend you since you're just competition for them. But you will observe their biddding strategy and their bid to "as is value" which you should convert to a percentage figure. (ex: do they stop at 50%,60%,70%???). These are the pros. They will let you have it if you just want a "warm experience".
There's no need to initiate the bidding wait until the participation drops down to one or two bidders. Then, if you're still interested, go for it
Lastly, you need to do your homework not only regarding the liens which concern you but what the property is worth,"as is" and your maximum bid amount which you promise NOT TO EXCEED.
federal tax liens are not automatically superior liens!!
you need to do a title search. Depending when a mortgage was recorded or a judgment lien perfected are the things to watch for...so whoever records/dockets first enjoys priority...
Quote:
On 2003-10-07 16:34, lp1 wrote:
federal tax liens are not automatically superior liens!!
you need to do a title search. Depending when a mortgage was recorded or a judgment lien perfected are the things to watch for...so whoever records/dockets first enjoys priority...
I think you may be off base a little lp1.
Federal liens may not be superior, but at a sheriffs sale, i don't think they get wiped out....i believe they stay with the property.
Someone correct me if I'm wrong
federal tax liens enjoy a 120 day right of redemption...in other words if you are the successfull bidder the federal govt has the ability to pay you what you payed at auction w/ interest and they would take over....there are certain circumstances that the federal govt has the right to redeem up to a 1 year....so as far the lien being wiped out the answer is no. it takes care of it self when the redemption period runs out...i've never had the govt come and redeem .. but i wouldnt do any improvements to the property until the redemption run out, because the govt will not reimburse you . so again do a title search, if you dont know how to do it yourself , hire someone to do one....cya.
Also keep in mind that the property you purchase at auction may still be occupied. It is then YOUR responsibilty to evict the former owners- in a lawful manner, of course.
How does one do a title search on their own? Through county records? Could anyone shed light on where to go in Phila, PA to do that? I talked to 7 people at City Hall last week, and not one person had the slightest clue where I could get a list of public court filings. I didn't even ask for mortgage N.O.D.s!