Author Topic: Foreclosure/Sheriff's Auctions  (Read 1650 times)

Bourbon

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Foreclosure/Sheriff's Auctions
« on: March 19, 2014, 10:04:00 AM »
Has anyone had experience with this?  I've eyeballed them for awhile but never gone and sat in.  There is a property near me in a desirable area that will be going up for auction on Tuesday.  1800 sq ft, built in 1908.  In good condition I would estimate the home to go for 230-260k.  Last sold for 67k in 1992. The lien is a small(~14k) tax lien, but if the property sells for less than 2/3 of appraisal(150k) the owner can buy it back for a year.

I've thought of dropping a letter in the mail or knocking on the door before the sale to get a chance to see the house and offer a deal, or just going on Tuesday.  Depending on the configuration in the house this could be split into a duplex and each unit rented for 900-1200 or as a single unit for 1800 or just flipped for sale.

Honestly is has the feel of a great deal, but also of one I'm not entirely prepared for. 

rusty

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Re: Foreclosure/Sheriff's Auctions
« Reply #1 on: March 19, 2014, 01:03:40 PM »
One of the properties I own was bought at the court house steps.  It was very nice and I thought it would make a great flip.  It was in a small town about 30 minutes away.  Second least expensive house on the street.  Very nice neighborhood.

People would drop by while we were doing some painting.  People loved the price and the house, but would never call back.  About 2 weeks into it, the neighbor stopped by and asked me "did you know the guy who owned this house beat his girlfriend to death with a baseball bat inside the house?"  Needless to say, I realized why no one would come back.  I ended up renting it and it has been a great property since (8 yrs).  Glad I never flipped it.

nedwin

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Re: Foreclosure/Sheriff's Auctions
« Reply #2 on: March 19, 2014, 01:21:55 PM »
I've been to several foreclosure auctions in Colorado, so I have a little experience.  It seems you have some idea what kind of sale it is and its legalities, but I think you should be very cautious and research it extensively.  Why is it being auctioned, foreclosure or tax sale?  What would you be buying if you bid on it?  When would you have clear title to it if you were the successful bidder?  What, if any, redemption rights do the owners or junior liens have and how long do those rights last?  What happens to your investment if the owner or a junior lienor redeems?  Are there any superior or prior liens that you would take the property subject to (watch out for federal tax liens)?  Is the home occupied?

I knew the foreclosure law when I was bidding on them here.  I would do a title search to verify that there were no prior or superior liens on the property and that it was the first mortgage foreclosing.  I would try to inspect the property, if possible.  I would also research to see that the foreclosure was procedurally sound and likely would not be undone because of some mistake by the bank or their attorney. 

SDREMNGR

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Re: Foreclosure/Sheriff's Auctions
« Reply #3 on: March 26, 2014, 06:20:19 PM »
Here in SD, it's a very competitive auction market.  Lots of big name guys with millions in cash with their worker bees on phones with them constantly.  I'd tread carefully, you can find bargains but you will only win if your cost structure is lower than competition or if you are willing to take less profit or if you see or know something the other guy does not.  The big downside for the little guy is that if you hit one bad landmine and lose money, it could wipe you out.  The bigger guys do hundreds of these a year and so a few bad investments are part of the cost of doing business.

It's not the easy money that late night infomercials make it seem.