6 Tips for Avoiding Pitfalls at a Sheriff’s Sale
Here in Lancaster County, there are several ways to get started in real estate investing. One popular way is to purchase a property at a Sheriff’s Sale or Tax Sale. Whether it is the sheriff’s sale, judicial tax sale, or upset tax sale you may be able to obtain an investment property at a significantly reduced price. Yet, if you go to your first auction unprepared, you can spend too much on a property or worse – buy one with hidden structural or significant title issues.
To get started in investing in foreclosure and tax sale properties, you will want to avoid common pitfalls in the auction process. Before you start buying properties at a sheriff’s sale, judicial tax sale, or upset tax sale, read through these 6 tips to help potential investors like you:
Guide to Buying Real Estate at a Sheriff’s Sale
1. Investigate the property.
Do your research on your desired property. Know where it is, whether someone currently lives in it, and the general condition of the property.
2. Get practice.
If you have time, consider going to a sheriff’s sale as an observer. That way, you can get a feel for the flow, the process, and what is required of bidders. Then when you are ready to bid on a property, you are experienced at the auction format.
3. Be prepared for surprises.
Unlike other methods of real estate transactions, properties sold at sheriff’s sales, judicial tax sales, and the upset tax sales are sold as-is. There will not likely be an opportunity for an inspection or walk through of the property. You may find that the property was left in a poor condition, sustained structural damage, or have other hidden issues, and you won’t know any of this before the auction.
4. Consider existing residents.
If there are residents currently occupying the property, you inherit these residents and their removal may require you to bring a separate civil action in ejectment.
5. Bring cash, certified check, or an attorney’s escrow check.
Lancaster County’s sheriff sale requires a 20% down payment the day of the auction, and only takes cash, a certified check, or an attorney’s escrow check which must be payable to the Sheriff of Lancaster County. For upset tax sales and judicial tax sales, the Tax Claim Bureau does accept money orders as well as cash, a certified check, or an attorney’s escrow check, but they require full payment the day of the auction.
6. Hire an experienced attorney.
Since properties are sold as-is, there is no guarantee that the property has a clean title. In addition to the bank holding the mortgage, there may be additional judgments, liens, and other claimants to the property’s title. If you find a property you like, it would be wise to hire an experienced attorney, who can perform a title search, let you know of additional liens, and give you legal advice as to handling these issues. It is important to note that the upset tax sale does not divest junior lien holders.