Deals Galore, but Buyer Beware
Making a smart purchase at a sheriff’s auction isn’t as simple as having the highest bid
By Christopher Geer
The auction begins promptly. The first property comes up, the auctioneer asks for prices and a round of furious bidding breaks out. Having seen the house from the curb, you are interested in buying and put in your own bid. Suddenly, the bidding stops and you find you have won the prize. The house is yours. It is your lucky break, because the property is vacant, needed repairs are limited and your tax expenses are negligible. A lick of paint, a few roof tiles, some landscaping and you are ready to put the property back
on the market to realize a sizable gain. Realistic? About as much as winning the Power Ball.
When it comes to buying
property at a sheriff’s
sale, it pays to discover.
Indeed, most buyers will
tell you that, considering
you have to put down 10
percent immediately if your bid is
accepted (and up to $200 for a title
search), thorough background research on
auctioned properties is priceless.
That’s because when you buy a
property
through a
sheriff’s auction,
you’re also
buying all the
problems that
come with it,
from liens and
second
mortgages to
angry evictees
who might
vandalize the
place, or who
might still be
living there.
“The best
thing you can
do is to have a
title search
done on the
property and
find out how
many debts and
liens are
associated with
the property,
because you
inherit those,”
says Sgt.
Richard Fersch,
who handles
auctions for the
Allegheny County Sheriff's Department.
Both Allegheny and Washington
counties hold sheriff sales at the beginning
of each month. In Allegheny, the sale takes
place on the first Monday of every month,
while in Washington, the sale is on the
first Friday of the month except August.
In both counties, the winning bidder
is required to pay 10 percent of the bid
price to the sheriff's office on the day of
the purchase and the balance within the
week. Failure to pay the balance on time
will result in a loss of the opportunity to
buy the property and loss of the down
payment.
Allegheny County auctions about 650
properties each month, with approximately
75 percent of those being sold back to the
lenders or mortgage holder. Sheriff’s sales
are advertised publicly in area newspapers
and in publications like the Pittsburgh
Legal Journal. “Most of the sales are a
result of foreclosures, people who can’t
make the payments on their mortgages,”
Fersch says.
But if you’re planning to waltz
in to a county auction and find a great
property for a steal, beware: “Buying
property at a sheriff sale is a very
dangerous thing. If you don't look
into these properties, you can get
seriously burnt,” Fersch remarks.
Washington County resident
Tim Donahue purchased a home
for his daughter in Dormont in
April 2007 through a sheriff sale
and offers similar advice. “If you
don't conduct a title search and do
your own due diligence, it can be a
real problem,” he says. “I happen
to know the people who owned
the property I bought beforehand,
so I knew how much they owed
on the house and the taxes
on it. You have to know what that figure
is and know what it will cost to fix it,
because you can’t get inside these
homes to inspect them.”
In Washington County, Capt. James
Altman has been managing the sheriff’s
sale duties for the last eight years.
“Some people just come to watch, but
the people who actually bid are those
that have usually done their research
and know the financials related to the
properties before they bid.”
In Washington County, most of the
buyers at sheriff’s sales are banks. Harry
A. Stiffler, an attorney from Washington,
Pa., often represents banks at these sales.
“People think you can get rich at these
sales because it seems like these
properties are sold for pennies on the
headache,” he says.
“Buying one of these houses can
bring a host of potential nightmares that a
title search won’t tell you about. That’s the
best advice I could give someone looking
to buy property in this way: Do your
homework.”
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