Common Sense Real Estate

Foreclosure auctions or sheriff's sales as they're referred to in my area ( Lake County IL.) are the sales that are held at the end of the foreclosure process, where the homes are either sold at the auction or taken back by the bank. The sale information is published as a legal notice specific to each property in the local newspaper. Lists of homes being auctioned can also be obtained. The homes are offered in a public auction and sell to the highest bidder above the bank's opening bid. The bank decides the amount of the opening bid. If nobody bids on the home, it goes back to the bank.

It had been years since I had been to a sheriff's sale. I ended up going to one yesterday. There were some things I noticed right away that hadn't changed. You could tell as the room started filling up that many of these people knew each other or at least were used to seeing each other every week. I'm sure for some, it's a full time job. One thing that was different was the volume of homes being run through the auction. The sales I had been to previously had only a handful of homes being auctioned. Yesterday there must have been close to a hundred!

 It was interesting to see what some homes sell for at auction versus sales on the open market - some pretty deep discounts are evident. There was one house being auctioned that I was very familiar with and knew it's value. It was a tri-level which normally would sell for about 130k, conservatively. The bank's opening bid on this home was $87,000 and nobody bid on it. This shows not only the discounts available with these homes but also how much of a discount these buyers expect or require before they'll bid.  A couple of the homes, I could tell by the addresses, were great buys for the opening bid amount.

This was a much more active sale than ones I had been to. There were a few properties that had multiple bidders which drove the price up several thousand dollars above the bank's opening bid. Clearly some of these homes were much better buys than others. Of all the homes available, only about ten of them sold. The rest were taken back by the bank and will most likely find their way onto the market in the coming months.

There are definitely opportunities at these sales but it's not something to just show up at and buy something. These purchases should include plenty of research prior to the sale, including the advice of your attorney.