Please help with Sheriff Sale question !! - Posted by JackN

Posted by sandie on April 21, 2005 at 24:48:45:

IB (NJ),
Thanks for responing. It never entered my mind to go bidding on FC.

Please help with Sheriff Sale question !! - Posted by JackN

Posted by JackN on April 18, 2005 at 15:51:59:

I just purchased a house at sheriff sale in New Jersey with advertised municipal liens of about $16,000A after asking town’s tax collector, I was informed that there is actually $40,000 owed to town (taxes + other municipal liens)

Can I legally back out from the this purchase since the fact that newspaper did not disclose the actual amount properly?

please help!!!

Fastest wy to learn! - Posted by Bill Taylor

Posted by Bill Taylor on April 19, 2005 at 20:47:45:

I have been in your shoes. You go in thinking you know a lot about this process and then the sh** hits the fan. You know how most of us found out what you just learned? I bought a home valued at 100000 for 45000 at sheriff sale. I was on top of the world until my phone rang that day and the lender that brought the foreclosure asked If I knew that he was the second mortgage holder. Guess what? I immediately called my attorney and he was able to negotiate with the lender to set the sale aside and we had to pay interest cossts and all other costs in volved in doing so. It cost me about 2000 bucks but did I learn something. Can you say I will never do that again, well I hope not we do a lot more research now. I could have went to college to lern for years and they would have forgot that part of what I needed. Good luck in the future, live and learn.

You have a problem! - Posted by Randy (SD)

Posted by Randy (SD) on April 18, 2005 at 17:07:07:

Have you already paid your bid price in the auction? Sheriff sales here require payment via certified funds in 24 hours. Check the disclaimers both in the newspaper and any document you received from the Sheriff’s sale most likely you have no recourse except to pay the $40,000 owed to the town. Kind of like if the newspaper publishes the wrong winning lottery numbers and you try to claim the $50 million jackpot-NOT, buyer beware.

Re: You have a problem! - Posted by JackN

Posted by JackN on April 18, 2005 at 19:52:19:

Thanks guys for the response. Looks like I will have to eat it.
Good thing house has still good amount of equity.
That is a great lesson. Never trust that newspaper notice will give you all the info.

Re: You have a problem! - Posted by ski

Posted by ski on April 18, 2005 at 18:36:25:

BUYER BE WHERE… you should have done your due diligence…

Re: You have a problem! - Posted by Patrick Lismon

Posted by Patrick Lismon on April 18, 2005 at 18:17:22:

My problem is that I’m trying to get financial to work a deal on a lease to purchase option to buy. First thing is how does this procedure work and how do I go about getting started. I looking forward to getting my first deal done ASAP. Help

You sure about that equity? - Posted by IB (NJ)

Posted by IB (NJ) on April 20, 2005 at 24:14:02:

What else don’t you know about this property? Did you rely solely on the newspaper for a title search or did you actually check the liens on the property AND owner (i.e. IRS liens)? Just wondering if your ‘discovery’ period is over or has it just begun?

Sheriff Sale Newbie’s… Take Note - Posted by JT-IN

Posted by JT-IN on April 18, 2005 at 20:58:15:

Jack:

Too bad that you got a surprise here of about $ 24K. You are fortunate that the liens were within your margin of potential equity and profit range.

Folks seem to get all excited when Sheriff Sale veterans caution them about the things that can go undiscovered and end up being a surprise or a disaster, depending on the size of the surprise. Sheriff Sales are serious business jammed packed with Risk, Risk, and more Risk. Jack, believe it or not, you were lucky here, becasue this could have been a lot worse… so no doubt you will do more thorough “due diligence” before attending the next Sheriff Sale.

Glad that things are going to work out for you on this… When given the choice of being “Good” or “Lucky”… I choose Lucky every time… The only problem is, we don’t often get a choice in the matter… but a little luck once in a while never hurts…

JT-IN

Re: Sheriff Sale Newbie’s… Take Note - Posted by sandie

Posted by sandie on April 18, 2005 at 23:22:08:

Hi Everyone,
What is a real good list of things that you should be looking for and where to find them? (prier to going to sheriffs sale)
Thanks,
Sandie

Sandy if you’re asking this question… - Posted by IB (NJ)

Posted by IB (NJ) on April 20, 2005 at 24:11:37:

you shouldn’t think about buying at sheriff sales. While JT (always) gives informative answers you simply can’t learn how to buy properties at sheriff sales simply by asking a few questions to out of state investors on a message board.

Of the 3 types of foreclosures (preforeclosures, sheriff sales, and REO’s) sheriff sales are by far the riskiest. Make sure you are experienced in preforeclosures and have attended several sheriff sales BEFORE you start bidding at them.

My opinion, of course.

Wow… hard question… or - Posted by JT-IN

Posted by JT-IN on April 19, 2005 at 10:54:12:

Maybe just hard to answer… Not that it would necesarily be so hard, but detailed and involved… Let me give you another analogy here… The first year college student arrives on campus… and eagerly asks the student who just finished his Masters degree… “So do I need to learn here…”

There plain and simply truth is that there is a heck of a lot to know to be a well prepared FC investor… Things you must know…

  1. The courthouse, and how to research the docs, as well as understand some fairly advanced legal terminology that you must read.

  2. Have a pretty good understanding of Bankruptcy, and its implication on Creditors.

  3. Your states laws as they pertain to Foreclosure. Notice, redemption, and other legal twists. Questions like the one asked at the outset of this thread… “Can I back out of this purchase…?” It is best to know all this in advance, since the “education on the spot method” can be quite costly.

  4. Human nature… this is a biggie. If you don’t have a great handle on understanding what makes people tick, then you really should find another path of RE investing than FC’s… There is so much of FC’s that involve this aspect…

  5. Values… of the underlying property, of constuction costs… whether you are rehabing or not… You must know the cost even if you aren’t planning on being the one to fix the property, so you know what a rehabber investor can afford to pay…

  6. Tax Liens… The USA, Dept of Treasury, and other branches of our Fed’l bureaucracy have certain rules that apply just to them for redemption following a Sheriff Sale or FC sale… Each state has their own seperate rules that apply to their right to redeem. Now most folks on this site will tell you that the Fed’l gov’t has 120 days following a FC sale to redeem a property… This is not necessarily true… They have AT LEAST 120 days, but in many cases they have longer. If the lien is ANY other Fed’l lien other than a Treasury lien, (IRS), then the redemption period is ONE YEAR. The std 120 days is automatically extended if your states redemption period for an owner is greater than that of the IRS period… so their’s is extended… You see, this is more advanced than a two paragraph post…

  7. Notice: which I briefly mentioned earlier… is so critical. This becomes paramount when determining if a lien from a creditor gets wiped out or not following the sale. If you don’t know someone that has bought a property at a Sheriff Sale, that has inherited an existing lien, then you haven’t been to many Sheriff sales… I know lots of these folks… and they thought it couldn’t happen to them…

  8. Encroachments and boundary disputes. These are rarely settled in a FC case… If the neighbor owned your driveway before the FC sale, they will own it after the FC sale…

  9. Small nuances… Why does Joe always start playing with his chin when he is about to stop bidding…? I am not really a poker player, but I know what many quirks are of my competitors at the SS are. I also know when they are going to buy the property at any cost, so I simply make sure that they spend as much of their money buying that property… which may cause them to have to stay home next week… Just a few little things to know…

  10. Have a good Atty… Not one who does Divorces on Thursdays, and RE closings on Fridays, etc… Have an Atty who is in the business of FC’s. My Atty represents Lenders in FC’s. He does 6000 FC cases per year… He knows the laws backwards and forwards as they relate to RE and FC law. Not that I haven’t stumped him a few times, but think if I could stump him, what would the avg Gen’l Practice Atty do with that situation…? I have seen so many cases where Attys will tell someone an answer pertaining to FC that is WRONG… If you are going to pay for RE advice, get it from a RE Atty; one who specializes is FC’s… If you were having heart problems, you wouldn’t go see the Podiatrist…

Anyway, I think you see there are a few things to be on top of, and more that one could just zip out a laundry list for you… It really and truly takes years and years to become proficient at FC sale investing. The avg person that is at the sale bidding on property, is an accident waiting to happen, because they have done about 8 minutes of research… and likely couldn’t list 3 of the items above…

So the bottom line is educate yourself, don’t rush into a situation where you are pledging sizable dollars in a potential deal, unless you know the inner workings of what is up…

Just the way that I view things…

JT-IN