If a homeowner is unable to make their mortgage payments or pay their taxes, the property could be seized and sold at a public auction, often called a sheriff sale auction or police auction.
A sheriff sale auction is a great chance to find an affordable home or purchase an investment property. It offers reduced prices (as low as half the value), and gives you the power to set a price based on your specific budget and value of the home.
You can find affordable homes by taking advantage of a sheriff sale auction, but you need to make sure you are starting with the right approach.
Keep these tips in mind and you’ll be better equipped to make the right choice.
Research, Research, Research
Thorough research is the first step to purchasing property. There is a lot to loose in an investment property, so take your time. You can usually find properties up for auction by looking at your local paper, visiting the county sheriff’s website, or contacting the county clerk’s office. If you find a home that might be up for foreclosure, conduct a full title search and meticulously evaluate the property by consulting with appraisers, brokers, and area realtors.
If possible, inspect the property yourself. Make an investment by hiring an inspector to assess any repairs you might have to make before moving in, renting the property, or selling it for profit. If you are unable to inspect the property, proceed with caution and keep some cash ready for repairs.
Set a Maximum Amount That You Will Bid
Before making a single bid, decide upon an exact number for your maximum price. You need to think about this before going into the auction, because the process can be hectic and you may not have the time, nor the mental clarity, to do this when the bidding is in full swing. Always stick to your budget and be willing to walk away from a property that goes too high.
Prepare for the Sale
There are a few things you should do in preparation for the sheriff sale auction. First of all, phone ahead to make sure the auction is still on. Last-minute deals between the current owner, lawyers, and the banks can end an auction abruptly. While you’re calling, ask about the purchase requirements, deposits, due dates, and types of payments that will be accepted.
Be Ready to Walk Away
The worst thing you can do is jump into an auction purchase without being fully prepared, so always be ready to walk away. You are much better off to wait for the next home than to buy an auctioned house that might be a money pit. Successful buyers in any market have the wherewithal and discipline to walk away from any deal.
Obtain Title Insurance.
If you purchase a home at a sheriff sale auction, one of the first things you should do is purchase title insurance, as it will protect you from any title disputes. If, for example, a former spouse of the foreclosed owner appears years later and claims legal ownership of the home, your title insurance will help you deal with any financial implications.
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