Buying a Property in Pennsylvania Before the Sheriff's Sale

13 Replies

Hey everyone.  Yesterday I got a lead which could be very profitable.  Time is of the essence.  First, I will give a little background, and then the question.  The full situation will be posted by me on another thread, as I have one other question on his deal.

The seller inherited a slew of rentals from her grandfather in Reading, PA and the surrounding Berks County area.  After he passed, it was discovered that the property manager basically stole most of the operating cash from him.  I suspect the manager's friends or family were living in the properties, because they all vacated immediately after he died.  That's the short version.

Now, here's my question. The seller has a final court hearing on August 11 to finalize a sheriff's sale, which is scheduled for September. She is telling me that the bank is telling her to do everything she can to sell it. I guess because they'd rather have it off the books than take it back. She told me the payoff amount, which I would verify. So, if we come to an agreement, would I need to close before the hearing on August 11, or would having a contract signed with a later closing date after the 11th be sufficient enough for them to postpone it and allow me to close? I have HML, insurance, and contractor lined up, but it is my first deal, so I think the HML might want to take more time doing DD before funding. They said they could typically find in 7-10 days, so we are really cutting it close. I'm hoping to have a bit of extra time to get everything lined up.

It will be state specific, but generally you can buy it right up until at least the day before the actual auction date.   Local custom will dictate whether judges/trustees will delay an auction date with a solid looking contract in hand.

@Wayne Brooks - Pennsylvania is judicial, so no trustees. 

But in PA you can buy it up until the day before the sheriff sale. 

The bank attorneys can be contacted and you can ask them if they will postpone if there is a purchase agreement in place. They might want to know specifics, like funding source, arms length, any contingencies, and the expected closing date. Sometimes all postponements will have been used up, and the bank won't postpone any longer, so you want to be aware of that - because you will have to close before the sheriff sale if that is the case. 

Make sure that with the payoff amount, you get the date to which the payoff is good and the per diem amount if you go beyond that date. Be sure to look for other things going unpaid - like property taxes and municipal utility services - because those are potential liens that will have to be paid off as well. 

@Wayne Brooks @Steve Babiak

Closing before the sheriff sale in September won't be a problem.  I was worried that there would be no stopping it after the August 11 hearing.

So, my first plan would be to get it under contract prior to the hearing August 11, and ask for a postponement until after the closing.  If they won't postpone, I should still be able to have until the day before the sale to close.  Correct?

I'll defer to @Steve Babiak 's expertise in PA, however the sale event is generally the drop dead time/date event you want to beat. 

Postponement is another thing. There are a lot of moving parts here: 

1) borrower (who is either on title now or acting as estate PR) but not the borrower of record, 

2) lender, 

3) perhaps a servicer, 

4) attorney for lender handling this judicial foreclosure

5) court (presumably having issued a Writ some time ago

6) Sheriff or Levying officer.

I do not know the precise sale procedure in PA, however I would peddle fast to get under contract, show proof of funds (or equivalent) to attorney (may not cooperate) and be BE READY to close at least several days prior to sale. 

Someone will either be slow or drop the ball. Expect and prepare for that by reviewing your checklist daily. Go get 'em!

Originally posted by @Jason Krick :

I understand.  The biggest question I have is that I could still close after the August 11 hearing and before the sale, correct?

Yes that is correct. The sheriff sale is the point where it's over. If you try to close the day of the sale, it might not get closed in time. So as @Rick Harmon said, give a few days just in case something goes astray. 

Im from pottstown and woke up today with the same situation.  Was wondering how the process has gone for you trying to beat that sheriff sale deadline.  I have til august 27 on a property i found out about yesterday.  

@Marc Oister

I'm still going through the process.  The sale is 9/11/15.  I have a strong rapport with the seller.  She is giving me access to the property if I need to take a contractor, plumber, etc. in to look at the place.  In my case, the goal is to offer the balance of the mortgage, while still making the numbers work.  She knows the payoff amount, as do I.  So, there are no surprises in negotiations.  She just needs it gone in order to help preserve credit rating.   It is simply a question of whether or not I can pay off the balance and still turn a profit.  Good luck to you!

@Brendon Weaver

Welcome!  This site is fantastic.  The short version is that the deal fell through right as I had everything lined up.  Here's the detailed story:

It's a shame.  The seller listed it with a realtor and the asking price is comparable to other homes in the area that need minor to no work at all.  As you read my response, you'll see why the attorney is not a big fan of me.  Nor am I a fan of hers...