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: http://www.gofirstsecurity.com/Purchase/buying_foreclosed_homes.htm

Short Sales – Influencing The Brokers Price Opinion (BPO)

When you do a short sale, the lender most likely will order a BPO.

BPO stands for Brokers Price Opinion and is a process by which a realtor

appointed by the lender, comes out to evaluate the property and give his “opinion”

on what the value of the property is. So the lender sends a realtor out to the

property and it’s your job to influence the BPO to come down as low as you can.

This is the whole key to a successful short sale. This is why you want the lender to

contact you, so you can meet the realtor at the front door and influence their

BPO to come in as low as possible. To build your case, the first thing you

should do is show up with a list of repairs and estimates for the property. If you

have to go get a contractor to bid a job or repair, go get one. The higher the quote,

the better. This is good evidence. The second thing you should do is show up with

a list of comps in the area that are low. Most real estate agents appreciate you

doing some of their work for them. Provide them with the lowest comps you can

find and they will decide if they want to use them or not.

When you meet the realtor on the property steps, just tell him you are the buyer and

doing a short sale on the house. Then you will proceed to walk the realtor

through the property. When you are walking through the property make sure you

point any and every repair or problem with the property. Again, you are trying to

make the value of the home come in as low as possible. If you are dealing with a

nice house with minor cosmetics, you may really have to search for problems.

Then call him the next morning to see if he was able to get the price you wanted. Sometimes they will tell you sometimes they won’t. Just ask to find out. If they won’t tell you, call the bank. Many times they will tell you. You really have no control over this process. You can encourage the BPO to come in low, but this does not always mean they will come in low.

If there is someone living in the property, you may want to ask them to leave when

the realtor comes out to do a BPO. If they can’t, just tell them to stay out

of the way. Explain to them you will be trying to make the house value look as low

as possible. They may not understand why, just tell them it is the only way to save

their house. Also, tell them not to worry about cleaning up at all, leave it the way it

is. This is the one time your house can be a mess. You need to make the value of

the property look as low as possible.

If the loan on the property is FHA or VA, they will not take less than 82% of the BPO.

Usually you can expect the BPO to be in the range of 80-90% of the

repaired value. So if you have a house that is worth $120,000 after repairs, the BPO

you would guess to be about $98,000 to $108,000. Then multiply that amount by

82% and this should give you a good estimate of what to offer. If it is not a VA/FHA

loan, then you can offer whatever you want. It is a good idea to start low, just in

case your BPO comes back lower than you thought, you can always raise the offer. It

is an educated guess to find out what the BPO will be. If it comes back

high not in your favor, sometimes you can call the loss mitigation department and

tell them the BPO is way to high. Many times they will work with you and

order another BPO. Whatever you do, don’t ever give up. If they don’t accept it,

negotiate with them some more. Ask them what they are looking for, or what they

are trying to get. Sometimes they will tell you, sometimes they won’t. Be

persistence. Be patient. Ask, ask, ask. Part of being successful in this business is

how you negotiate. You don’t ever want to be rude to them, but let them know

where you stand. Make them aware of what’s happening to the property.