What is a Sheriff's Sale?
A sheriff's sale is an auction following a court order to seize and
liquidate property in order to satisfy the non-payment of a debt or
other obligation of the owner.
Sheriff Sale Auction Process
When a property owner defaults on his or her obligation to pay a debt,
legal action may result in a court order instructing the county
sheriff's department to hold a public auction for the sale of the
property. The process starts with advertisements in the local county
newspapers and other media to notify the public of the impending
sheriff's auction and to provide the address of the property, auction
date, place and other relevant information. At the time of the auction,
interested buyers are asked to bid on the property being auctioned and
the highest bidder wins the right to buy it. A deposit, called "hand
money" has to be paid in cash or certified check by the winning bidder,
in order to secure the purchase. Closing is scheduled for a future date,
when the winning bidder has to present him or herself in order to sign
ownership documents and pay the balance of the price owed. In the event
the winning bidder refuses to close as required, the property will again
go up for auction and all costs associated with re-auctioning the
property and any shortfall in the price will have to be paid.
Advantages and Disadvantages of Buying at Sheriff Sales
The main advantage in buying a property at a sheriff's sale is the big
discount in price that can be achieved. A purchase price of up to 50% or
so below market value is possible, depending on the number of competing
bidders and the flexibility of the foreclosing lender.
There are a number of disadvantages to also consider prior to bidding at
any sheriff sale:
1. A buyer has to conduct his or her own title search and confirm
details on the real estate being considered prior to bidding at the
public auction. This can very well represent lost time and money, if the
buyer does not win the bid.
2. A buyer will in most cases have to buy a property being auctioned
without prior inspection and in "as is" condition.
3. If a property happen to be occupied by a tenant or previous owner, it
is the responsibility of a buyer to remove the occupant.
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