How do Sheriff auctions work? Are you allowed a contingency period?

Question

Hello,

I work in investments but have never purchased a property directly through an auction of any kind. For Sheriff auctions, I have been told there is no contingency period and that the purchase is final. Is that correct? I realize this may vary by state, so I am refering to California sheriff auctions. Do any of you have any concerns or horror stories etc about buying through auction? I greatly appreciate the discussion.

Thanks!

Ryan ODonnell · Answer

One of the best auction buyers I've seen/known spent almost 7 months getting to know the process and people and slowly working his way in. That's because there's usually a "regulars" crowd that you better be cognizant and sometimes respectful of or you can get burned. If you're going to make that your buying strategy then spend the time going and not buying for a while and just get to know things. If that's not your main buying method, you can still expect to get lucky sometimes. You can't see the property and don't have much time to run your numbers so it's definitely an adrenaline rush, but it's also not necessary to put yourself through that to get good deals right now. 
From what I know about most auctions they are in fact final. Whether you have to come up with all the money at the auction or have 24 hours varies. 
We bought a property at auction only to find out it was zoned commercial. Ended up not being to big of a deal, but did cost us 2 months of time we didn't expect to get a variance before selling it.
You gotta be smart and careful...and sometimes a gambler!

Jon Holdman · Answer

Hopefully someone from CA with post with specifics.  Here is CO it's cash on the barrelhead.  The exact procedure varies by county.  Some stop the auction and you must immediately hand over the case.  Some have you go to the back of the room.  Some give you a few hours to run to the bank and get a cashier's check for the correct amount.

If there are senior liens, they're now yours.

If someone is living there, they're now your tenant.

Unless you approach the homeowner before the sale and get them to let you look around, you won't see the inside.  If the walls have been knocked down and the drains are full of cement, its your problem.