Buying in court house/Sheriff sales or auctions

[Raj Kumar]

I have 2 weeks left to identify the replacement properties and finding good deals has been challenging in the last 1 month. I want to go the auctions route either acquire properties in courthouse steps/sheriff sales or companies like auction.com. Actually i was planning to go to a sheriff sale tomorrow and just struck me that i need the funds from the intermediary. Can this be done? or do I have to buy properties only in a regular sale? My Intermediary is Exeter and they are in the west coast, so won't be able to reach them until noon EST. So I am posting here to see if I can get an answer from someone before 9 AM EST.

[Bill Exeter]

Originally posted by @Raj Kumar:

I have 2 weeks left to identify the replacement properties and finding good deals has been challenging in the last 1 month. I want to go the auctions route either acquire properties in courthouse steps/sheriff sales or companies like auction.com. Actually i was planning to go to a sheriff sale tomorrow and just struck me that i need the funds from the intermediary. Can this be done? or do I have to buy properties only in a regular sale? My Intermediary is Exeter and they are in the west coast, so won't be able to reach them until noon EST. So I am posting here to see if I can get an answer from someone before 9 AM EST.

Hi Raj,

Yes, buying property at a Sheriff's sale, Trustee's Sale (foreclosure sale), Tax Sale, etc., can be accomplished through a 1031 Exchange.  However, it gets more complicated because their is no Purchase and Sale Agreement or Contract of any kind involved when you participate in auctions like this, so the integration into the 1031 Exchange gets more complicated.  Generally, the bidding at the auction will have to be done on behalf of (under the name of) the Qualified Intermediary and the Qualified Intermediary will have to actually legal title to the property.  It will depend on the specific auction house and their settlement procedures.

The payment of the acquisition if you are the winning bidder can also be problematic depending on when the auction requires payment.  Some auctions require payment on the day of the auction, some require a percent down and then payment after so many days, some provide a settlement period.  The Qualified Intermediary may need to get cashiers checks to you for use at the auction itself if there is no settlement period.