Buying Property At A Sheriff Sale

Many individuals are considering buying property at a sheriff sale. Here are some things to think about.

Individuals interested in buying low cost real estate property may be interested in doing this through a sheriff sale. It’s a buyers’ market these days because of the housing slump and unheard of number of foreclosed properties on the market. If a person has money to invest, low priced homes may be a good investment. Only they can make the decision about whether this is true for them.

The housing market went from gold to dirt in just a few short years time. The bubble and burst over the last five years was a mind blower for even the most experienced real estate agent. The normal course of property values has usually been that of slow growth. Most people were taught that buying a home was a solid investment for their future. After a number of years, most houses rose in value slowly but surely.

In 2004 through early 2006, this changed. Home prices were rising hourly and bidding wars were rampant. Realtors were driving fancy cars and riding the gravy train. Home flipping was seen as a way to fund retirement and every dream. Mortgages were handed out left and right to everyone with a pulse. It was, however, too good to be true.

Many mortgage loans were given to people who couldn’t really afford them via crazily creative financing plans. This worked for a while, but like every house of cards, eventually they fall down. When people begin to foreclose on their mortgages, a domino effect took place that wiped out many individuals, businesses, banks and credit ratings. In the wake was a sea of foreclosures available to the highest bidder.

A sheriff sale is a public auction of real estate property. The sheriff’s office is a legal participant in the process. This may entail evicting non-paying homeowners and more. If there are back taxes to be paid, a tax auction will be held in order to clear up all these public debts. Many of these houses are being sold for a fraction of what the old loans and values were. Why? In order to re-stabilize the economy and housing market, this excess supply of belly up homes must be sold.

Is this a good idea for an investor? Here are some things to think about:

Low cost housing: It is true that property is being sold for unheard of prices. For example, homes in one Arizona town that sold for nearly $180,000 during the bubble are now being auctioned off for prices as low as $30,000 to $40,000.

Cash buyers preferred: One problem with these smoking deals is that they are “as is” meaning that the buyer inherits all problems. It’s up to the buyer to perform due diligence in order to know what they are getting into. Many banks do not want to go along for that ride. If there are expensive flaws in the structure, the bank doesn’t want to be holding the note. A cash buyer will have to step in to assume the liability.

The old rules don’t count anymore: The old rule book about buying real estate has been thrown out the window. All that advice about owning property for one’s security sure seems silly today. A smoking deal today could turn to gold tomorrow. Or not. Only a crystal ball knows for sure.

Buying reduced priced properties at a sheriff sale can be a way of obtaining inexpensive real estate. Whether it’s a good investment or not will remain to be seen in years to come.

Article Tags: Sheriff Sale, Real Estate

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