Thoughts on sherif auctions to acquire real estate

[Nicholas Ferraiuolo]

I know most people oppose buying houses at an auction but I was wondering if people had any experience or just how people feel in general about this strategy

[Bruce Lynn]

It can be good, but also tough.

Remember you have to hold the property for 2 years (even if they tell you 6 months) typically before you can resale for the most part (if you want title insurance or the buyer wants title insurance.)

You have to pay taxes, insurance and expenses during those two years.

There could be additional taxes when you buy, especially right now when many counties have not had sales for over a year.  

So let's say the foreclosure lawsuit happened in 2019, but it just now goes to sale....you could owe 2019, 2020, and 2021 taxes as well as your purchase price....or more depending on the county and their timing.

You can collect rents during the holding period if you can get the occupant to pay, but you shouldn't do full rehab because if it gets redeemed you probably won't get your rehab money back.

My advice is get the sales list.  Do you research.  Pick some properties you think you want to buy and go to the sale and see what they sell for.  Then see how those bids match your maximum allowable offer.  Don't go to bid.   Go to watch.

Also remember these are cash sales....depending on the county you may have to pay cash the minute after the sale.   Dallas County for example immediately after the one property auction you move with the deputy to the front of the room and they run your cash thru a bill counter, while the next property auction continues.   Some counties may give you until 1pm or 2pm to go get a cashiers check.  Each county is a little different.    If you've never seen anyone pull out $100,000 or $200,000 out of their boot or bra...or maybe a briefcase  then you need to go to the next Dallas County sale for the show.