Knowing How To Bid At Sheriff Sale or Auction
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- Опубликовано: 7 фев 2025
- Learn the basics and tips for becoming a bidder at a Sheriff Sale or Judicial Auction. All information is based on procedures in Illinois and the counties surrounding Chicago.
Floss Law, LLC
1200 Shermer Road, Suite 206
Northbrook, IL 60062
Ph: 224-326-2903
Bob@flosslaw.com
www.flosslaw.com
Best video on youtube about this topic.
I've done 30+ a year for 32 years and getting a property that's clean, paint and sell is rare.
Sheriff sales are much riskier than foreclosure sales, since the sale needs to cover any and all liens against the owner, if the proceeds of the Sheriff sale doesn't cover it, you have to pay it to get good title. Sheriff sales also don't disclose anything, it's up to you to find it.
Sheriff sales usually have $5k deposit, which attracts novice or first-time bidders who don't know how things work, are the winning bidder and have no idea what they agreed to, so they default and lose the $5k deposit. Don't bother warning them, they just think you're trying to scam them out of the deal of a lifetime and learn their hard lesson the hard way.
If you live in a state where it takes months to ratify before you can close, don't pay HOA / condo fees before you're the owner. If the sale doesn't ratify, you won't get the property, and you will NOT get reimbursed for paying condo / HOA fees. They will be collected at closing anyway. In a state where you have to pay 100% of the purchase price within 24 hours it may be wise to pay those to get on the good side of the condo / HOA, but it can be VERY difficult to even figure out who they are, especially with the HOA. If there are a lot of condo / HOA liens, they will be against the prior owner, not you, but your choice can often be to pay them or hire a lawyer to fight paying them, either way, you're paying a lot, so if they aren't too much, it's cheaper to pay.
If the prior owner was engaged in theft of energy, meaning they broke into the meter and turned electricity back on without paying, when you seek to have the power turned on, the electric company will refer the case to their "investigator" which is really an attempt to get YOU to pay the outstanding bill, because they will "investigate" for 4 months and refuse service, even after you've sent every document showing you're the new owner.
In the counties where I buy, some of them have water bills accessible to the public, transfer taxes, etc. You can often find an online closing calculator for every jurisdiction to provide a close estimate of closing costs. I've seen some $10k, $15k water bills and some aggressive bidders blows by my number by $25k on EVERY TIME. I've never been the winning bidder on a property with a huge water bill or other large obligation that the winning bidder is responsible for, because there is ALWAYS someone there who doesn't know and bids aggressively.
I calculate a minimum net of $30k, so the bidder blowing by my number by $25k is likely not making anything, they're likely to lose money.
I carefully comp every property, check if it's in tax sale, check water bill, I value them as 100% renovated and price it as the new high comp for that model in that community.
My minority partner is a licensed MHIC, licensed electrician, licensed plumber and licensed HVAC, he holds all licenses, and we get permits.
If someone wins the bid against us on a house that needs permits and they fail to pull permits, they will get a stop work order, either because someone in the neighborhood made a complaint, or because I did.
If the house needs new electric, plumbing, HVAC, a lot of framing, they need permits to make the home safe. If we are doing permits, EVERYONE is doing them. I'm not giving competitors a $15k+ bidding advantage because they hire some guy from the Home Depot parking lot to rewire a house into a fire trap.
There are also wholesalers who buy to flip to rehabbers and make a $5k - $10k+ margin. They cover multiple counties, don't do their homework and instead bid based on who else is bidding, when experienced investors are bidding, they piggyback off of your hard work and bid, assuming they know. I will often bid them into bad deals, but they will frequently run an AVM and if they think they won a bad deal, they will instruct their bidding proxies not to sign.
Wholesalers also often pay auctioneers for bids in advance, which is illegal in my state, but they do it, and they pay them by giving them the flip listing if they cannot quick flip the contract themselves. Many auctioneers are also licensed real estate agents. There's a very, very dishonest auctioneer who has been in the business as long as I have who was told by the owner of the auction company that he could not accept listings after someone made a complaint with the state, but he pays another agent $500 to list them in their name.
Cash for keys is an option, I always try, but the occupants usually don't cooperate. Many holdovers understand that $5k cash for keys only covers 2 month's rent and they can stay 6 months+ before an eviction. If there are excess proceeds, which go to the owner, you can use that as leverage, claiming you won't close until they leave and they won't get the money until they are gone, but if you live in a state where you have to pay in full the day after the sale, that won't work. Be nice and respectful to them if you want any chance of cooperation. NEVER pay them early, ONLY when you meet at the house, they sign a doc giving possession and give you the keys. They are people who don't pay their bills, pay them early and they will take the money and not move out.
Owners who become holdover tenants are usually angry and many, but not all, will do damage. I've had them pour cement down all the drains, rip out the wiring, remove the HVAC, smash a hole in every piece of drywall, turn on all the faucets and plug the drains, etc. Had a former Secret Service agent who did more damage than any other holdover I've ever dealt with.
Post Covid, squatters have become a huge problem. Scammers learned during Covid that you can stay in a property, so a squatter claiming they are a tenant is a civil issue, not a criminal one, so you have to go through the courts, which means it might be 8 months before they are gone. Squatters will usually take cash for keys, because they just go find another empty house and squat there.
Local governments are more than happy to make YOU responsible for the otherwise homeless person who is squatting instead of that person being THEIR problem. In blue states, like mine, the government ALWAYS sides with wrongdoers, they treat the foreclosure buyer as an absolute villain.
It's a very cutthroat business with a lot of risks and headaches, but it's lucrative if you're very good at it.
Thank you very much for sharing some of your experience.
So much helpful information here. Thanks so much. So glad I didn't rush in clueless.
Great information shared.
Thanks 😊
VERY DETAILED! thank youuuuu!
Thank you for your video , very informative!
Excellent info. Thanks
Thanks for taking the time
The county websites list the upcoming foreclosure sales with amounts of debt owed on each property. Do these debt amounts include all liens that the winning bid/bidder will need to pay or would there be other major debt that the winning bidder would still be responsible for paying?
In a sheriff sale, you need to research judgments, liens and anything else attached to the property. This means you need to check the land records database to see what mortgages active and what liens are in place. Tax liens against the individual aren't typically part of that, but property tax liens are. If it has property tax liens, then it's in tax sale too and you will need to pay that lien off to prevent a challenge by the winner of that auction for possession. tax sale purchasers are usually interested in the interest on the bid instead of the property, but will pursue a juicy margin.
At what point in this process do we have the right to secure the property?
Ohio investor here. I’ve purchased a couple sheriff sale properties. We were responsible to pay the back taxes, but it came out of our winning bid amount. I had to deliver the check to the fiscal office but that amount was deducted from the total that I owed the Sheriff based on my winning bid. That’s not the case for a Sheriff sale near Chicago?
Glad you asked this. Was wondering same thing.
There seems to be a little inconsistency in the video. It's really hard to tell without going through the process as every county makes their language as vague and confusing as possible. Their websites are usually 2 years out of date as well, and often links won't be available from their home pages- only through a search engine. Phone calls will usually only get you put back through the ringer with "you'll have to access court documents" and/or "You'll have to wait until the sale occurs to find out." 😆🤤
Can you explain approximately how much closing cost will be or how do I figure how much more out of pocket it will cost?
Awesome info, in Georgia you need 100% of the money at the time of sale.
Same in Indiana.
@@JoshuaWeaver92 Some counties in Indiana I believe will give you 2 hours after sale to pay in full. What I'm curious about is how exactly do you go about giving them a cashiers check in the exact amount that's owed right on the spot? Most banks I'm aware of fill the amount in AT the bank- not the sale!
Do you just go in with a really big check and they refund the difference? Thanks
@@Rick-the-Swift Yes, you take a cashier's check for your maximum bid. If the bid goes above your maximum bid, you stop bidding.
Thanks for sharing!
Thank you for this video
can you explain $1 action... is there a catch?
Where do you get list of properties?
Which municipalities are the problems? Would love to see the list? Thank you
Should i purchase under my name or an LLC? I dont current have an LLC
initial cashier's check at auction. does the balance need to be cashier's check as well? 34:33
Or cash.
After initial payment, its all wire transfer.
@@Rick-the-Swift you would get multiple cashier's check in various denominations (e.g., 5 ($1000), 5($2000), 5($3000), etc, etc.) up to the max amount of initial payment that you have to submit if you win the auction.
How do you check all these things? Are the websites? Do I call the water companies?
Some investors will spend money on a tract search from a title company. Others will pull information from public websites manually like the recorder, treasurer, assessor, clerk, etc. It takes time. Water is probably the hardest one to obtain.
I wanted to know how is that some sheriff sales I’ve seen properties over 200k plus bought for a $1000. And if this is possible what are the extra cost.
I've seen this but it's completely random and most of the time a vacant lot. I would be concerned a lender auctioning it for that low is trying to dump it because of a serious issue. Always do your research. If you buy at sheriff sale you could be assuming a large tax bill, code violations, or find out the building has been demolished.
How to know what mortgage 1st or 2nd Lien is being Auctioned at a Judicial Sale?
I typically review the recorders website for any open mortgages and check the court website to review foreclosure case.
How do you get a blank cashiers check?
Exactly.
Thank you for the great info! If the house is vacant, how do I know if it is winterized?
Typically you'll see a posting on the door from the preservation company.
@@FlossLawLLC Thanks for the response! Would the posting just say "House is vacant" and that is considered winterized or the post will clearly say "winterized"? Thank you for your help!
How do I know for sure how much the minimum bid will be? Do all sheriff sales have to be that amount + $100? I am in Michigan.
Most of the time we don't know until auction starts.
@@FlossLawLLC then how do you know how much to make the cashier's check out for?
@@df56gh4d5h No one seems to be able to answer your question. I'd like to know as well. Never heard of a blank cashiers check🤔
Why not video an auction?
Buyer beware to the buyer bidding on a property with its land patent pulled forward and recorded. This property comes with no title.