Hayden Homes

Three years ago, before I had even started thinking about the opportunities in Real Estate, I realized that I needed to stop paying for a place to live for nothing in return. So I decided to purchase my first home and start gaining equity on my money.

A friend of mine referred me to a Realtor that he had used and I called her up. She showed me a few places that were within my price range, but I ended up finding a neighborhood that I loved while driving around one weekend. I let her know about it and sure enough she found multiple places within the neighborhood.

The property that I liked the best was considerably less than many of the other properties in the neighborhood (imagine that). After asking the reasoning for the low price, my Realtor informed me that it was a foreclosure and I would be dealing directly with the bank if I wanted to purchase this home. Needless to say, I purchased the home thinking I received a great deal on a foreclosed home…

Now that I have been researching and dealing with Real Estate for a little while, I realize that I received a decent deal but it could have possibly been better. When someone goes into foreclosure there is a court process that they must go through. The sheriff may come and seize the premises, change the locks etc… The property then goes to sheriff sale where it will be auctioned off. You can usually find these listings on your counties sheriff web site which is usually listed off of your counties main web site. The county will use the proceeds from the auction to pay off the liens on the property. The mortgage is always the first lien to be paid, so most of the time the bank that lent out the money for the home will be at the sheriff sale. This is because they want to make sure that they are going to get the money that is owed to them. To do this, they will usually bid on the home until it reaches at least the amount that they are still owed. This will insure that they either get the home or the money they are owed on the home. Depending on many factors (how many properties the bank currently has, what size the bank is, etc) the bank may bid even more because they know that they can sell it for even more of a profit or stop there because they do not want to hassle with it (employee and legal fees can add up fast for them). The latter is what you want to hope for, this is where you can get a great deal on a property. You may also want to look for a home that was purchased many years ago, this could mean that more of their mortgage is paid off and the bank is owed less money so they will not bid as high (this is just a theory and will not always play out).

So it is possible that I could have gone to the sheriff sale and purchased my home for even less than my “Great Deal” via the bank. The downside of foreclosures is that you can not usually inspect the home prior to the sale. Also you are usually purchasing them “As Is”, so anything that comes up after the purchase it is your problem. Finally, you will usually need 10% of the final purchase amount the day of the auction.

I am planing on purchasing my next home at the sheriff sale, so look for an upcoming article on my experience.

I am by no means a foreclosure expert, so If you find any errors in my column please let me know so that I can provide the most accurate information to my readers. I will be sure to give you credit in my article for any updates that are provided. As always, send me an email.

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