Sheriff Sale Tips - What Am I Bidding On?
Just like most investors you are looking for the best real estate deal that you can find. In order to do this you have to look at all real estate marketplaces. I have found that in my experience the real estate market place that has the most confusion is the sheriff sale. There is not a lot of information on the sheriff sale and it can be pretty frustrating to a investor who is just starting out. I wrote this article to clear up a few concerns that a new investor may have. My experiences may help guide you in the right direction or at least identify the right questions to ask when you start to look into sheriff sales.
You are bidding on foreclosed property that went through the whole foreclosure process and it is now available for auction at the courthouse. The properties that you are bidding on have usually taken some time before the foreclosure process is complete. That means that most properties have been vacant and depending on the area may or may not have been winterized. In a lot of cases these properties will have been vacant for a considerable amount of time. In some cases a year or more. In a year a lot of things can happen to a property. It is not a bad idea to assume the worse when figuring what it is that you want to bid on a particular property.
For example the lack of winterization can completely destroy existing plumbing in cold weather climates. And the fact that a property stands vacant can ruin landscaping and other features of the property without the proper maintenance. I find that it is a good idea to include the worse case scenario in your estimates so that you can conservatively come to a estimate that keeps you, as the investor, financially safe. The reason that I take the conservative approach is the fact that you are not able to see inside of the properties that are on the sheriff sale. You will be able to drive by the properties but there is no showing like you would normally see in a property that is for sale by a real estate agent for example.
So basically you are bidding blind. You will not know what is in the property until you actually buy the place. I have been both pleasantly surprised and disappointed in properties that I have bought on sheriff sales. Some properties that are bid on may have people living in the property. They may be tenants or the previous owners or the actual owners of the property. These people are a great source of information to you as the real estate investor. In most cases I found that they are more than willing to talk about the whole situation. In some cases the property owner may even work out a deal with you before the property actually goes through the sheriff sale. This is a great situation for you because you don't have to bid against anyone to get the property.
In summary you may not know exactly what you are bidding on in a sheriff sale. I found that it is a good idea to keep all estimates conservative. This way you will have at least have a buffer zone to work with if there are any unforeseen problems that may arise.
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