Sheriff Sales – What You Need To Know

Buying a home from a sheriff sale can be a great way to purchase a home. However there are a lot of factors to consider when going to the county courthouse to find that special bargain. Read on for a list of important factors to consider when buying a home from sheriff sale or sheriff auction.

  • When placing a bid to buy a home at sheriff sale you need to be aware that a 10% down payment is required immediately proceeding the auction. This 10% needs to be in the form of personal check, certified check or cash (although some counties do not accept personal check). If you do not know how much money you are going to be able to buy the home for then you may want to obtain a certified check in the amount of the maximum that you intend to bid for a certain house and this way you have enough to cover the 10% and you do not go over the amount you intended to bid.
  • After you have successfully placed the highest bid and won an auction for a specific home you will have 30 days from then to come up with the remainder of the balance of the home. The remaining balance of the purchase price is due by certified check only. You will generally have 8 days from the date of the auction to come up with the balance in full without interest being assessed, however you will have up to 30 days to come up with the remaining balance with interest being assessed per day. If you are not able to pay the remaining balance within 30 days you can request an extension, which are not always granted, or you will be held in contempt of court and risk losing your 10% down payment. Understand that winning an auction is a legally binding agreement and you are bound to the terms of the sheriff’s department and their policies and laws for a sheriff sale.
  • Financing from traditional mortgage lenders on sheriff sale homes is usually very difficult to obtain. Most mortgage lenders will want to have a full appraisal done, inside and out, and even if you are the winning bidder of a home and pay your 10%, you still do not and will not have access to get onto the property or inside the home. Therefore, getting an appraisal is extremely difficult. Also, many homes that have been foreclosed upon and are being sold via auction have been run down, poorly maintained and also have some problems with them. Depending on the severity of these items, many lenders do not want to get involved in properties of this nature.
  • Finally, bidding usually starts at 2/3’s of the county assessed value of the home and the homes will not generally be sold for less than this. Most lenders will send a representative from their attorney’s office to the sheriff sales to bid on the homes to buy them back. Usually, lenders will not allow a home to be sold at sheriff sale for below what is owed on the current mortgage. Therefore, knowing roughly how much was owed on a mortgage prior to going to the sheriff sale is very helpful. Not all lenders send a representative to every auction to buy a home back, but most do. Sometimes, homes that do not sell at auction will be attempted to be sold again at a future sheriff sale with the starting price being decreased. This is when your opportunity to buy a home for way below market value really increases.

Therefore, it is important to understand that by bidding on a home you are agreeing that if you are the winning bidder you will pay the full amount of your bid, plus interest if applicable for the home or you can be held in contempt of court and possibly lose your down payment, along with other court costs and fees. It is wise to do your homework on a property before bidding on it to make sure that you are indeed getting a good deal. Finally know what your maximum bid is for each property that you intend to bid on and never exceed that bid. Understanding the information above can better help you to prepare for a sheriff sale or sheriff auction and help to make sure that you do not end up losing a substantial amount of money. For more information on buying foreclosed homes, please visit: