Top 3 Reasons for Buying and REO from the Bank vs. Sheriff's Sale

In this video we are going to discuss my 3 top reasons for buying an REO from the bank versus buying a property at the sheriff sale.

1.       The property is vacant and you don’t have to deal with the eviction process

2.       The property has been cleaned out and in some instances it has even been repaired

3. The property qualifies for a traditional mortgage and in some instances the bank even offers special financing

3 major reasons for not buying a property at a Sheriff Sale

1.       You are usually buying the property without ever seeing the inside. 

2.       You have to be able to put a 10% deposit down at the time of the sale and then you need to come up with the balance in 30 days. 

3.       You will probably have to evict the former owner from the property which can be a long and tedious process.  If not done correctly the former owner could stay in the property for years.

For these reasons I suggest that you don’t buy a foreclosure at the Sheriff Sale.  What I do suggest to my clients looking for a good deal is to buy an REO which a property that has already been through the sheriff sale process.  In part 3 I will give you my top 3 reasons why buying an REO is better than buying a property at a Sheriff Sale.  

How to Buy a Foreclosure in Chester County

When a homeowner doesn’t pay their mortgage for a few months the bank will notify them that they are in default and at risk of being foreclosed on.  If a homeowner is unable to get caught up then the bank will start the foreclosure process.  The homeowner will then have a set time period to get caught up before the property is foreclosed on.  If the owner can’t get caught up then the bank will auction off the property at the sheriff sale.  

At the sheriff sale the bank will set a minimum bid of the total debt that is owed on the property.  This includes the unpaid balance on the mortgage plus any fees and expenses the bank has incurred.  If no one at the Sheriff Sale is willing to pay the minimum bid then the ownership of the property reverts to the bank and the property is now what we call an REO or Real Estate Owned.  

Now you could buy a property at the Sheriff Sale but I consider this to be very risky.  Check out part 2 of the series for the 3 major reasons you should not buy a property at the Sheriff Sale.  As always, if you are looking for more information please contact me directly.