Lancaster PA Real Estate Blog

When it comes to "great deals in distressed properties, the first rule is that nothing's as simple as it sounds...

Regarding a recent customer letter about Sheriff Sales, I thought I'd post my reply for the edification of the deal-hunters in training out there.  These are my opinions & observations - give me a call for more detail if you're interested!

1. Homes at the Sheriff Sale that have value will be sought after by professionals, of which there are about 4-5 at every sale.  A good value consists of low outstanding loan balances, good location and acceptable condition.  Those houses get bid up pretty high, and it's abssolutely critical to know your margin to a fine degree.  The pros bring laptops with each auction detailed with estimated resale, top bid and other notes to help keep everything straight during the sale.  You should try to attend the next one to see how things flow.  One other thing - you'll need to research and have at least 5 properties you want to invest in - because at least 2 of those will get pulled just before the sale date (due to a stay issued by the judge) and the pros will get at least 2 others from you...

2. Under a Sheriff or Tax Lein (public) sale all responsibility rests upon the purchaser to handle everything.  If there's a hidden lein or if someone needs evicted, or if there are huge water bills owed, the purchaser gets to deal with it.  There's no help from anyone in a public sale situation.

Bottom line - Public sales are very risky for first-time investors, and should only be undertaken with tremendous prior preparation and thorough funding.  Only a very few of my customers ever go this direction in the end.  Depending on your business goals, I'd recommend that you try to purchase either:
1) an open-market foreclosure (there are lots more out there these days - I can email you daily updates if you wish).  These sales have had the title cleaned by the lender before being re-offered to the public.  I sell a lot of these to investors, and the key is to be able to jump on a good one the same day.  If the seller decides that there might be some more money to be milked out of a buyer, they'll immediately announce what's called a "highest and best" deadline for all interested parties.  Again, you need to really know your numbers, be it resale or rental income vs. expenses.
2) HUD resales - every Friday watch www.hooksvanholm.com, which is the PA outlet for gov't foreclosure sales.  Not as much inventory, but the titles are clean and they make it easy.  The competition can be fierce because everyone knows about this but once in a long while you can catch an opening and get a deal.  The bidding is all done sealed online through an authorized broker (which I am one).  Investors have to wait a week to bid but it gives you a few days to do your numbers before placing your bid - a rare convenience in this game.

Hope this helps - let me know what you'd like to go after!  I can meet you for coffee some time if you'd like to go over your business plan in more detail. 

Thanks,
Jeff