Philadelphia - Sheiff Sale

[Tom Doherty]

BP (Philly Area)

Anyone familiar with the sheriff sale process in Philly? Specifically mortgage forclosures? I've been to the site which provides certain information but curious if anyone on BP in the Philadelphia area has had a sucess or can provide advice on purchasing from the sale.

FYI - I have atteneded the sheriff sale in Delaware County so I understand the process (Upset price/opening bid)

Thank you for the help!

[David Weintraub]

SFS (Sheriff Foreclosure Sale)

Here's what I know...

First, the Sheriff runs a "How to Buy at Sheriff Sale" class a couple times a month that's free.  Have to sign up; can't just show up (well, you can, but you could get shut out).  You can ask anything you like.

The Philly sale is as large a sale as you'll ever witness; held in a conference room.

There are also Philly tax sales, which are quite similar, but carry different rules/laws on properties.  

At the Philly sale you bid like you do any other sale.  The properties are supposedly offered "Free and clear".  You can trust that, but if something comes up on the title, and you plan on suing the city...lets just say...good luck with that.  

Check the taxes, run a title search, or at least learn how to do it.  You can get the documents from the city, but better to let a pro do it.  I know a number of very good title companies in Philly who do great work with this stuff.  

The Sheriff literally lists everything about the sale right here.

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One aspect of Philly which is different from some counties in New Jersey, for example, is the time frame the Sheriff's office takes to record the deed.  That matters because if you're looking for funding via hard money, per se, and you need to close within 30 days (after you put down your 10%), Philly is difficult.  If the deed isn't recorded before the 30 days then you likely cannot get title insurance.  If you can't get title insurance then you aren't likely to get a hard money loan. 

As Jay Hinrichs pointed out to me, in places like Michigan there is/was "gap insurance" that covers the period between purchase and the deed being recorded.  This doesn't exist in Philadelphia.  

There is an argument that if the Sheriff is offering properties "Free and Clear" then what is the concern?  Again, the Sheriff is merely doing their best job to do this, but it doesn't mean they will.  They're not paying a title company to insure this gap, nor are they running in depth searches.

The Sheriff uses the monies that pay for the properties to pay off lien holders in order.  Anyone not paid is wiped out, at least according to the Sheriff.

However, if you have the finances to purchase property in Philadelphia via SFS you can refinance them in order to free up cash, if that's what you want to do.  

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Quick note on Philly Tax Sales.

Operates like the SFS process, but the owners being foreclosed have a 1 year right of redemption to pay off their taxes, et al after the property has been sold.  However, the owner of the property has to pay the purchaser back their monies and 10% as well as any NECESSARY improvements made on the property.  

This does happen, but it's why the best case scenario is to buy vacants or empty lots.  Then you don't have to worry about what happens to the property over the course of the year.

Getting title insurance isn't always easy on these properties, but if you can let your money sit for a year, it could be a good investment.

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The Diversified Investors Group (DIG) in Philadelphia has many members WELL VERSED in this field.  I would suggest attending an event to network more.

Steve Babiak and Joe Scorese are also very resourceful.  

GO CUBS!