Pennsylvania Sheriff's Sale & Foreclosure Process
Since I struggled so mightily in finding information about the Pennsylvania foreclosure and sheriff's sale process, I wanted to create a thread going through the process in detail in hopes that this may help someone down the road.
First, I've been looking into a property that's on my street (I'll post some info on the analysis I did and update it with progress) for quite some time now as it sat vacant. Finally, a notice was posted on the window that it was going up for Sheriff's sale. Intrigued, I looked into it for weeks and eventually convinced my wife to bid on the property - which we won. However, there are numerous things I learned throughout the process that I'd like to share:
1) The sheriff's sale is the legal process through which the bank (or foreclosing/selling entity - i.e. tax authority, lender, HOA) is able to regain title to the home. So, in many cases, when you go to the sheriff's sale, you're actually going to be bidding against some form of bank representation. Something I found during this process was that if you do your homework, you can determine the attorney that is representing the bank and who will be at the sale. In this instance, I actually convinced the attorney to tell me the bank's highest bid price so we knew exactly how to bid.
2) The bank will, in some cases, win the auction and then proceed to make any repairs on the home and list the property for sale. This is when the home becomes "REO" and is listed on the multi-list as a bank foreclosure. So, in this case, we were able to cut the bank out of the middle time period. There are, I'm sure, a ton of factors which will determine how much the bank will bid. In this instance, the home was FHA, so the bank (again, I'm assuming) didn't have much incentive to actually bid up the price because they're going to paid back through mortgage insurance.
3) The sheriff's sale was held in the hallway - yes, the hallway, of the courthouse. In some instances, it's held on the steps out front.
4) The bid is completely like a auction. It starts at one price and is literally auctioned off to the highest bidder - I don't know why but I thought it was more formal.
5) In PA, you must be 10% of the purchase price down immediately, that day. You only need your driver's license and a check. The additional 90% is due within 20 days of the auction. This gives you time to get funds in order and complete any other necessary items. For us, this means finalizing our business set up, business account, and aligning money.
6) I do think we made a mistake though. We did not do a formal legal title search before the sale. While this is a very low priced home so we don't have too much of a deposit at risk, I do think we should have completed the search before the sale. However, based on the current information that I know about the previous owner and all of the online research I was able to do, we should have a clean title.
All told, this was, at very worst a great learning experience, and at best it's a great deal and should make for a great flip.
What experiences do you have with Sheriff's sales? How does the process work in your state? Any advice on getting the title search/other work done before the actual sale?