A Guide to Purchasing Property from a Sheriff Sale
If you are in the market for a real estate investment or a new home, purchasing property from a Sheriff Sale can offer a unique opportunity for a bargain. However, it is essential to approach these sales with caution and be aware of the intricacies involved.
A Sheriff Sale, also known as a Tax Sale or Mortgage Foreclosure Sale, is a court-ordered public auction of property as part of the foreclosure process. Anyone can participate in these auctions, and the highest bidder becomes the new owner of the property.
Understanding the Lender’s Perspective
When a property is sold at a Sheriff Sale, it is typically due to the previous owner’s inability to repay their mortgage, leading to foreclosure. The properties in Sheriff Sales are often sold at a price lower than market value because the lender is only interested in recouping the outstanding mortgage debt and related costs.
Buyers should be aware of the lenders’ motivation in a Sheriff Sale because the auction process may not address other mortgages or liens on the property that you, as the new owner, would now be responsible for. It is the buyer’s responsibility to conduct thorough due diligence to avoid such complications.
We recommend a title search and an attorney review of the title to ensure you, as the buyer, know what you are getting in to. As an attorney-owned title agency, we have the resources to offer both essential due diligence services. The title search will reveal any outstanding mortgages, liens, or encumbrances on the property. Our attorneys will thoroughly assess the property’s legal history and identify any potential issues that may impact your ownership rights. If we find that the title is not clear, we can determine what remaining funds are owed and arrange for them to be paid. We can also assist in disputing any debts, liens, or judgments that show up in the title search.
Key Pros & Cons
Since the primary goal of a Sheriff Sale is to recover outstanding debt, the properties are often sold at a discount. Properties going for below market value may be attractive to real estate investors or homebuyers looking for a good deal.
Sheriff Sales follow a predetermined timeline, so they are typically swift. Once the auction is held, the buyer can gain ownership relatively quickly without prolonged negotiations.
Sheriff Sales are public auctions with an open bidding process. This transparency allows buyers to see their competition and make informed decisions during the auction.
Uncertain Title Status
While the property’s primary mortgage may be the focus of the Sheriffs Sale, there could be other unpaid liens, taxes, or obligations on the property that the buyer would be responsible for. Thorough due diligence is necessary to mitigate the risk of inheriting previous title issues.
Limited Access for Inspection
In most cases, buyers may not have full access to inspect the property before the auction – and properties sold at Sheriffs Sales typically come “as-is.” This can be risky if there are significant undisclosed issues or damages that the buyer would assume responsibility for.
Eviction and Occupancy Concerns
If the foreclosed property is occupied, the new owner may need to go through the eviction process, which can be time consuming and costly.
How to Find Out About Upcoming Sheriff Sales
Your county's or city’s official website should provide information about upcoming Sheriff Sales in your area. These listings include details about the properties, auction dates, and basic financial information.
Purchasing property from a Sheriff Sale can be a rewarding venture, but it requires careful due diligence. Contact us today if you are considering a Sheriff Sale for a real estate investment or home purchase.