Property purchase

pickapeppa · #1 10/25/06, 01:24 AM

Does anyone know the in's and out's of purchasing property at a sheriff's sale? So far, I've figured out (at least this is how it reads) that law firms handle the public notice, throw in some fees, and the courts come up with a judgement amount. When the auction is held, the mortgage company can also bid on the property, and usually obtains ownership by outbidding most others.

I've seen some properties listed for $30,000 judgement, that on zillow (grain of salt, yes

) are worth $160,000. So what exactly is to stop the mortgage company from high-bidding everyone and making a profit off of the subsequent sale?

And if this is how it works, what exactly is the point in going through this public sale process anyway?

spam4einstein · #2 10/25/06, 02:00 AM

The bank can do that. They have every right to bid too. banks however are not in the realestate collecting Biz. I did go to an auction once where the bank rep kept bidding, but dont know what they were up to. Usally the bank will just bid its payoff amount and that is all they do. be aware, you assume some forms of the aquired debts of the property and are subject to other risks like secret leases, rights of way...ect. DO YOUR HOMEWORK!!!! A guy once wrote a 99 year lease to his daughter on a 3 family before he was forclosed.

Hoop · #3 10/25/06, 05:23 AM

Laws vary by state. Do your homework.

Sheriffs sales take place on foreclosed properties in which the prior owners have lost their rights to the property via nonpayments to the lending institution or nonpayments for property taxes.

Many states are very backward on foreclosure of properties & the ensuing sheriffs sale for nonpayment of property taxes. Here is how it generally works in these states. A person doesn't pay their property taxes for 3 years and the state goes through seizure proceedings for nonpayment. This takes several months. Then a sheriffs sale takes place.
Unfortunately, in some of the states the prior property owner can RECLAIM the property by payment of all back property tax debts. If you live in a state such as this, a sheriffs sale is a complete waste of time. How would you like to purchase a house at a sheriffs sale, move in, fix it up, and then be told to get out 12 months later because the previous owner has legal claim to it?

On the other hand, you may live in a state where the prior property owner LOSES all rights to the property once the Sheriffs sale takes place. The winning bidder owns the land free and clear, period.

Know the laws in your state regarding sheriffs sales.

If you are expecting to purchase a $160,000 property for only $30,000, it won't happen.

Alice In TX/MO · #4 10/25/06, 07:01 AM

Absolutely check your local laws. Here in Southern Missouri, you can buy the property, but the original owner can get it back by paying off the debt within a year. Also, if you buy it, you have all sorts of obligations to notify the original owner during that time and document your efforts. It's too much trouble.

Shadow · #5 10/25/06, 09:47 AM

quit buying the I GOT A 100,000 DOLLAR PROPERTY FOR 25 CENTS books and watching the TV infro mercials and go to work and buy your dream homestead. Its a waste of your time and time equals your life. Just my experience. At public auction if it is worth a dime every person in the court house has told all thier buddys in realestate and they will all be there bidding on it. If they are not bidding you don't want it as something is really wrong with it.

agmantoo · #6 10/25/06, 11:47 AM

It is NOT a waste of time. You just need to be an astute buyer as with any major purchase. I have bought from the courthouse steps in the past and I have benefited significantly. Just do your homework!

spam4einstein · #7 10/25/06, 01:33 PM

Ive ben to about 10 auctions. About 3 were great deals. One, nobody else bid on and the only bidder got the place for 26k. It was worth about 50k. Thankfully, that bidder was my mom!

Most were decent prices, but no better than shopping around and a few kind high.

pickapeppa · #8 10/25/06, 09:37 PM

Quote:

Originally Posted by Shadow

quit buying the I GOT A 100,000 DOLLAR PROPERTY FOR 25 CENTS books and watching the TV infro mercials and go to work and buy your dream homestead. Its a waste of your time and time equals your life. Just my experience. At public auction if it is worth a dime every person in the court house has told all thier buddys in realestate and they will all be there bidding on it. If they are not bidding you don't want it as something is really wrong with it.

Quite an assumption you're making there, Shadow. I never even heard of a Sheriff's Sale until I went into the county's website to view the upcoming ballot on-line, and starting sifting through the info available.

It just so happens that was the only spare few moments of cyberspace pleasure (information-seeking) that I've been able to do since last week. And seriously, the only tv I've watched since last Wed. night was a few minutes of the weather.

To the more helpful posters here, is there a place or website where a person can learn about how to do all of this research? Would all of this info be on public record somewhere, and do the clerks help you find it?

AngieM2 · #9 10/25/06, 10:34 PM

I know here in Alabama, the foreclosures I've looked at are usually stripped and need some work.

They usually have to have $1000 for over about $75,000 and about $500 for under that as an earnest money to go with the offer when the realator puts in the offer. I have seen realators here take ones that stay on the market, put a bit of clean up into one, and then re-price and sell it. BUT, on all the foreclosures I've seen here in AL - there is a statement "One year right of redemption.' so, you are good to keep the house 366 days after closing, before that its a gamble.

I get an e-mail from GA about foreclosures,

there are possibilities.

But that's all I know about it first hand.

Angie

spam4einstein · #10 10/25/06, 11:10 PM

I dont know the laws where you are, but usally all "legal" debts, leins and rights of way type things should be recorded at the courthouse or town hall. Thing is, you have to not only do a "title search" and review court documents if possible..........but snoop to. Look in windows, see if basement doors are open. Ask anyone who may know anything about the place or owners for whatever info you can get. There is still the slight risk of some unknown problem...so figure in that to your bid and pump the sheriff's office for info. Find out if their is an inspection clause if there is a hidden problem. If you do buy, make sure you have title insurance a.s.a.p. and know you can come up with the balance within their time frame.

So imagine for instance a 1 in 10 chance you will have a 100,000 repair. Knock 10,000 off your bid. Thats what I do.

comfortablynumb · #11 10/25/06, 11:28 PM

so... existing leases have to be honored by the buyer?

mm
so, lets say you and your brother live on a farm, its in your name only; you are getting behind in payment s and you know at some point they will foreclose; so while you can still legally lease it out, you lease it to your brother, for $1 a month for 99 yrs.

the guy who wins a foreclosure auction has to honor the lease??

sounds like a loophole to me....

a cool one.

if they have to honor a lease on the property they buy at auction.

??????????

spam4einstein · #12 10/26/06, 12:37 AM

Every state is different. In CT the law as I understood it applied only to multi unit housing. A new owner could break a lease and kick a tennant out only if he planed to live there. Im not sure if the law was you could kick only 1 unit out for yourself, or couldnt kick anyone out if the building was more than three units in size. But basicaly, the law allows a new owner to remove a tennant if the new owner plans to live there.

U.S. law elements of the "spirit of the law", so if someone tries to play a slimey game like you described above, any judge worth his merit would find a way to rule aginst you.

A reasonable lease travels with the property in most cases. For instance, my mother in-law leased a shed and parking area to her mother who lives next door. Its a 99 year lease for $1. Of course she wont live that long, but it gaurentees her full use of that spot for her life without having to transfer ownership to her. It also must be continued by any new owners. Since it wasnt done in malice, it would be hard for a new owner to get out of it. This is in GA and was set up by a lawyer.

As for having to honor leases after a forclosure sale, I guess that may be different from state to state. But im most every state, leases transfer with ownership in a typical sale and must be honored.