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How Sheriff Auctions Work

Sheriff Auctions

Sheriff auctions are auction sales held locally to auction off repossessed houses. These sales are known as a sheriff sale auction because by law in many states, it is the sheriff who oversees, manages, and conducts these auctions. These auctions have their risks, but they can also be a great place to buy repo homes at up to 30% or even 50% under market value. If you want to start investing in real estate or just want to own your own home without breaking the bank, a repo property auction can be one of the least expensive ways to buy.

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State Laws and Foreclosure Sales

Sheriff Auctions

Each state has its statutes governing foreclosure and auctions. In most states, when a homeowner fails to pay their mortgage over a period of months, the lender can start foreclosure proceedings to repossess the property and recoup the costs of the loan. In most states, the property is auctioned off eventually. The auction is publicly announced and anyone from the public can attend a sheriff foreclosure auction. The highest bidder at the auction becomes the owner of the property.

The auction is created so that lenders and government agencies who insure loans can get their money back quickly. By the time a property is auctioned off, the mortgage may be many months or even more than a year in arrears, which means the lender has been losing money on the property for that long. Sellers are motivated to move these repo properties very quickly and starting bids can be sometimes very low, which means that sometimes bidding wars can start between investors who try to outbid each other.

Finding Foreclosure Auctions

Most sales are announced in newspaper notices and usually notices of upcoming real estate auctions are noted in some public places as well. Once you know where to look, you will quickly find many auction opportunities.

While it is easy to attend an auction, it is also easy to get carried away. As with any real estate transaction, there are risks involved with auctions. For example, properties sold at auction are sold "as is" with no warranties whatsoever. This means that if you find serious problems with a property after purchase, these problems are entirely your responsibly. It is essential to have a property inspected before an auction. Sometimes, this can be challenging since the public is not always granted access to a property before an auction.

Auctions also require you to pay cash for your purchase. This means that you need to arrange financing and have a check or money order ready when you bid. Further, you need to have a budget in mind. At an auction, it's easy to get carried away and to bid more than a property is worth. It is important to understand how much a property is worth, how much you are willing to bid on a property and how to maintain discipline when the bidding begins!

Buying Foreclosures

If a property is not sold at an auction, it becomes a Real Estate Owned (REO) home, property of the lender. The lender will try to sell an REO property quickly and often at a steep discount as well. Therefore, if you do not succeed at an auction, keep in mind that there are other ways to buy foreclosures as well. You can find thousands of these foreclosures at Repo-Homes.com, one of the most updated and comprehensive listings of repo properties. If you're not quite sure whether sheriff auctions are for you, visit us for listings of other low-cost options and the resources you need to buy with less risk.

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