Investor · San Diego, CA · Member since 2016 · 351 posts · 141 votes
Hey BP !
Seeking some feedback on anyone who has experience buying at Philadelphia's Sheriff Sale! Any best practices that have worked for investors purchasing properties to BRRRR?
Is it common for people to just wholesale properties from the auction?
I know some risks are getting stuck with a property that needs much more work than expected, or getting a property with a huge state lien on it. Any others that an auction newbie should consider?
Philadelphia, PA · Member since 2017 · 8 posts · 2 votes
9y
you need to compete with seasoned wholesale people. they usually go upto a certain level where they can make a substantial profit, so expect to bid higher in your first time to shrug them off. Also need to bring cashier checks in 100s to the maximum payment as they only accept cash or cashier checks. Sit in the front if you are not loud so they can hear you as they move quite fast. Do not expect to buy in good areas as demand for up and coming areas are quite high. My advice, go sit there a couple of times before you really go for it.
Philadelphia, PA · Member since 2017 · 8 posts · 2 votes
9y
you need to compete with seasoned wholesale people. they usually go upto a certain level where they can make a substantial profit, so expect to bid higher in your first time to shrug them off. Also need to bring cashier checks in 100s to the maximum payment as they only accept cash or cashier checks. Sit in the front if you are not loud so they can hear you as they move quite fast. Do not expect to buy in good areas as demand for up and coming areas are quite high. My advice, go sit there a couple of times before you really go for it.
Investor · San Diego, CA · Member since 2016 · 351 posts · 141 votes
9y
@Sathya Weerasooriya Great advice. I noticed a ton of properties with very low starting bids, but like you said most of those weren't in the best areas. Would you say that the majority of buyers at this auction are people who are wholesaling the properties within their 30 Day grace period of owning the property but only having to pay the initial 10% down? Thanks
There are few members on BP (e.g. @Steve Babiak) that can offer more practical advice than I can. That said, what I took away from working as a lawyer for the mortgagee in Philadelphia was that it's a very competitive market. I imagine that the tax sales are competitive as well.
A few years ago, I spoke to a few wealthy foreign investors that bought properties in "bad areas" in bulk. They were buying whatever they can get at a rapid pace. My understanding was that they were counting on the area getting gentrified like Fishtown. Not sure if that's still happening now days.
Disclaimer: While I’m an attorney licensed to practice in PA, I’m not your attorney. What I wrote above does not create an attorney/client relationship between us. I wrote the above for informational purposes. Do not rely on it as legal advice. Always consult with your attorney before you rely on the above information.
Investor · San Diego, CA · Member since 2016 · 351 posts · 141 votes
9y
@Chris K. I imagine it is extremely competitive, like you said. There were at least ~200 people in attendance at the Tax Delinquent Auctions this past week, not sure if that is more or less compared to previous months.
Right, that's what I figured some developers and foreign investors were doing, but it is nice to get some confirmation! Fishtown has definitely seen some changes over the years. At this point, it seems very appealing for residents to move to. We will see how other rougher areas pan out in the upcoming future!
I am no expert, but have gone to a few of the Sheriff Sales, and know people who buy from them.
@Sathya Weerasooriya was dead on. It's a fairly simple system to figure out, so there are investors and businesses (Mostly flippers) focus on it as a primary deal source, building a system to study properties in advance of the sale and having top bids ready to roll.
There is also a fair amount of, let's call it, less than ethical behavior going on. The only folks I've known to be successful have taken the time to learn the system and have a clear sense of value in a specific neighborhood or two. Knowing an area block-by-block (and getting lucky by properties popping up in your area), is the best way to increase your odds at seeing value others don't see.
Investor · San Diego, CA · Member since 2016 · 351 posts · 141 votes
9y
@Peter Dunne Thanks for the feedback! I've heard stories as well of Sheriff Sales being like the wild wild west at times (the big players bidding up properties just to keep the new players out of contention) but haven't experienced anything like that first hand.
It is definitely a place where you need to be on your A game and know each neighborhood inside and out to have success.
Collegeville, PA · Member since 2016 · 39 posts · 8 votes
9y
Have you looked at websites like auction.com? I haven't bought any properties there yet (still watching and learning) but it's another resource for auction properties. Anyone have any experience with the online sites?
Investor · San Diego, CA · Member since 2016 · 351 posts · 141 votes
9y
@Christina Shackleton I don't have any personal experience with online auction sites. I have some limiting beliefs about them, since they are available to EVERYONE online, I assume they are more saturated than the in person auctions. What have you gathered so far from observing?
Real Estate Investor · Audubon, PA · Member since 2009 · 13k+ posts · 8k+ votes
9y
@Christina Shackleton - come to the June DIG subgroup meeting, and you can chat with the auction.com rep there; or at the DIG meeting tomorrow night as well.
I'm just starting out investing (hunting for my first house hack/BRRRR) and have been interested in learning about these Sherriff's sales. I found this post in my quest for information and was wondering, seeing as the thread is two years old, what you've learned since then? Did you have any luck purchasing from a Sherriff's sale? Have you been attending them since? It's January of 2020 and I'm hoping to figure out the system (and it's potential pitfalls) before I drop real money. I'd appreciate any input you'd be willing to offer!