Sheriff Sales of Foreclosed Homes In PA
go to: Foreclosure Homes in PA Overview
Buying A Sheriff Sale Foreclosure – Skill Level Advanced
The County Sheriff in the various counties of Pennsylvania are charged with aiding mortgage loan holders recover their properties should the mortgagees (homeowners) go into default on their mortgage payments.
Deputy Sheriffs will serve the owner with the foreclosure papers, then deliver notices from the court during the foreclosure proceedings. Ultimately, the property winds up being sold at one of the regular “Sheriff Sales”, in most cases back to the mortgage holder. Upon the sale of the property the Sheriffs Department will attach its fees to be paid by the successful bidder.
A key point with Sheriff Sales inCentral PAis that they are public sales; that means the public is in attendance and can bid on any property on the docket. As a foreclosure homebuyer, you may be able to purchase a home for a significant discount against estimated market value here but there are a number of pitfalls to be aware of. This is a short list of issues to certainly be aware of (but not all issues):
1 – The property is sold without any title guarantees unlike a traditional real estate sale between parties. The Sheriff is merely selling the ownership stake – the buyer assumes all liabilities on the property (such as the mortgage and all other liens).
2 – The buyer assumes any liability from lawsuits or judgments brought against the property that may or may not currently be attached to the deed.
3 – The property is purchased in “as is” condition as of the day of sale.
4 – There is a nonrefundable deposit owed on the day of sale (typically 20%).
The Sheriff Sale proceeds as follows: The Deputy Sheriff running the sale usually gives an opening advisory to most of the points noted above. Then they announce the properties that are still on the docket for sale one by one. As they list a property they open with the “upset price” which is the total of the mortgage balance and fees due to the county, Sheriff etc. If you are in the audience and make a successful bid at this time the auction is halted while you go up, give them your certified check and sign the agreement of sale. If there are no public bidders (common for high-balance mortgages) then the bank’s representative sitting in the front row wins the house back for the amount of the fees due. This process is repeated until all properties are dealt with.
Some properties on the original docket will not be sold the day of the sale – either the owners, attorneys or the court will request a “stay” of the sale that “continues” the sale until the next date. Something to be aware of if you are considering some properties that were advertised in the newspaper ad announcing the Sheriff Sale.
How to prepare for a Sheriff Sale – Some Basic Guidelines
1 – Be aware that most buyers don’t/can’t actually buy a Sheriff Sale – there are better options, especially for first time home buyers and buyers needing a low down payment.
2 – Have enough liquid funds in the bank to be able to write a 20% check on the properties you are interested in. No shortcuts here unfortunately.
3 – Hire a title company such as Guardian Transfer to do title searches for you on the properties you’re interested in. It’s not advisable to bid on a property you’re not sure has no liens against it!
4 – Go to a couple of Sheriff sales first. You’ll need to be comfortable making bids against other investors and ready to “walk away” rather than overpay.
5 – Hire a real estate agent to help you estimate values for properties. While there is no provision for commissions at a Sheriff sale, you can pay a commission yourself from the purchase price to have professional advice available.
6 – Be ready to do physical inspections of the properties you are interested in, if possible.