Sheriff Sales - Any inside help?

Question

So I have bought several properties from my local sheriff sale. Pretty straight forward process. Get the list of houses, inspect the outside of the homes, check title, try to buy it low enough that you can make money.

So anyone who buys homes this way knows that the banks attorney always starts the bid. You don’t know what that starting bid is going to be until the day of the sale. I have been attending these for years and have found that some of my competitors (other investors) have inside information on what the bids are going to start out at. I’m trying to figure out where they are getting this information from so I can hopefully obtain the same information.

Knowing this information would be a huge time saver! help!

Andy Mirza · Answer

@Steven Cowles Chad and Ron are spot on with their replies. Call the lender's attorney or foreclosing trustee to get an opening bid. Here in California, it's normal to call the trustee to get that info. Or you can try the posting company that handles the auction.

Before I was a lender, I bought about 25 condos at trustee sales in California. When the foreclosing lender lowered their opening bid lower than my maximium bid, I knew to show up because the lender was ready to let the property go. The earlier they did this, the better so I knew I wouldn't be wasting my time. I still showed up to other auctions in the hope that the bid would be lowered before sale but if I had a schedule conflict, I would have to decide whether to take the chance. If the bid was set low enough ahead of time, I always showed up since I usually had no competition.

As a lender, I use that experience to my advantage. In the states that allow it, I make sure the auction company has our bidding instructions as soon as possible (which means a few days at the minimum, 1 to 2 weeks if I can.) The earlier potential buyers see a lowered opening bid, the more competition will show up for bidding.

We're a little bit different from the others, though. We don't mind taking back REOs and will set our bids higher where it's attractive to a buy and hold investor but not necessarily a fix and flip investor.

Rebecca E. · Answer

@Steven Cowles

How do you "check title"?  I'm very new, trying to learn.  Feel free to send me somewhere but Google is like drinking from a fire hose...

Steven Cowles · Answer

@Rebecca E. The easy way is get s connection at a title company and have them run a search for you. The other way is go to your county recorders office and search the parcel number. That will show any and all lines on the property and whether or not they will get wiped off the title with the foreclosure.

Steven Cowles · Answer

@Chad Urbshott it’s cool talking to someone who deals with these internally. So you guys try to align your bids with other as is homes in the area? What is a big turn off for a bank? I’ve heard roofs and mold turn a bank off

Chad U. · Answer

Contact each of the creditor rights attorneys bringing the property to sale to see if they will divulge this info.  Some may be willing to offer it up. I generally instruct our attorneys to credit bid a property below judgement amount when it is under water to be inline with as-is sales in the area.

Steven Cowles · Answer

@John Teachout yes always do your due diligence! I understand what your attorney friend was saying, however, here in Illinois at least, the sheriff sales homes sell for less than what is owed probably 90% of the time. I just want to find out who starts the bids for these homes and how I can contact them to find out what the bids will be prior to the sale so I don’t waste my time analyzing 10 houses and all 10 of them are going to start too high anyway. If that makes any sense.

John Teachout · Answer

I was just discussing this a few days ago with an attorney that specializes in closings. He said that mortgages are registered and by making the assumption it was a 30 year loan, you can calculate the amount paid off. This gives a ballpark guesstimate of what the lender is still owed.

Also, he told me that the sale is not necessarily for the first position mortgage so you have to pay attention to what you're buying. Also, there can be tax liens and so forth so you would want to know what those may total up to as well.

Steven Cowles · Answer

@Ted Kontos I’m in central Illinois. How about you?

Ted Kontos · Answer

@Steven Cowles I am new at this bigger pockets forum. Excuse the multiple posts.  Spend some time and learn how to do title searches.  At one of your next closing ask someone if they can teach you how to do it for a fee.  It’s not too difficult.

Ted Kontos · Answer

@Ted Kontos

Sheriff Sales - Any inside help?

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