We are going to focus on buying homes from Sheriff Auctions only for this article. Basically, the way a sheriff's sale works is that a home is foreclosed on by a lender usually due to a lack of the homeowner being able to make the necessary mortgage payments. Once the home is foreclosed upon, the home goes to Sheriff's Sale (this could happen quickly or it could take awhile to get to this point). At Sheriff's Sale most lenders have a representative go in and bid on the homes to make sure that the homes do not sell for too cheap.
They have a figure in mind that they know they must sell the home for and the bank representative will bid on the home up to that amount if necessary. If the bank buys the home back, they will usually hire a realty company to sell the home for them. If you are the successful winning bidder, then you have to pay 10% down immediately via cash or certified funds. You then have 7 days to pay the remaining balance off without incurring any interest. If you can not pay it off in 7 days, you have 30 days to pay the remaining balance off, with interest. If you are not able to pay the remaining balance off within 30 days, you can request an extension which is not always granted or be held in contempt of court, subject to fines and loss of your 10% earnest money deposit.
Obtaining financing on a home sold via sheriff's auction can often times be very difficult to do. Even if you are the winning bidder, you can not access the home until you have paid the remaining winning bid off in full. Most lenders are going to want a full interior/exterior appraisal done on the home and if you can not get into the home and the appraiser can not get into the home, then a full appraisal can to be done and that will be reason for immediate loan denial with most mortgage lenders. Many times foreclosed homes are run down and in need of serious repairs. Depending on what is wrong and how much the repair work is, this may be reason for immediate loan denial if the repair work can not be done before closing. Which, it obviously can not be done before closing since it is a bank owned home being sold at sheriffs sales and not through a traditional seller. Buying foreclosed homes through a sheriff sale is much easier and more recommended to do if you have the cash to buy the home(s) outright and you do not require financing.
While buying foreclosed homes can be a very lucrative business endeavor, it can also be a very risky one too. Buying homes from sheriff auction can help you to buy a home for under market value, but in most areas the bidding on these properties begins at two thirds of their appraised value. Therefore, you are most likely not going to get any ridiculously good deals at a sheriff's auction, but you can get some very good deals if you are patient enough and you do enough research on the properties before the auction. Remember you can not get into the home before you buy it, unless you stop by the house and the former homeowners are still living there, in which case you would need to ask them for their permission to walk through the home that they just had foreclosed on. This is usually not a recommended idea as some homeowners have very bitter feelings about losing their homes.
Buying foreclosed homes is not a get rich overnight way to make money. Just like most other business ventures, it takes time patience, hard work and a lot of effort to be successful at it. There are other ways to buy foreclosed homes as well, but we will save those for another article. See the link below for more information about buying foreclosed homes: http://www.nomoneydown123.com/Ohio/buying_foreclosed_homes.htmSheriff Sales - Buying Foreclosed Homes
The author of this article, Dave Zwierecki, has over 10 years of experience in the credit and mortgage lending fields. http://www.gofirstsecurity.com/Purchase/buying_foreclosed_homes.htm