I regularly hear from people who think buying a home at the sheriff's auction is a great idea.  It is, but only for a very few who 1) can buy for cash that day, 2) are willing to buy without seeing the inside of the home, and 3) have the financial depth to be able to absorb the losses that will inevitably come when they buy something that requires more in repairs than they will recover when they sell it. 

How it Works

The auction clerk begins with a list of homes that, as of that morning, were to be sold at auction today.  Generally speaking, well more than half of those (last time I was there it was 275) will not be sold at that moment because the auction date has been postponed (and sometimes cancelled), usually at the request of the lender.  So the process begins with the clerk reading the information on each of those individually, most often ending with "postponed at the request of the beneficiary") That can take the better part of an hour. 


1. are "as-is, where is" sales,
2) are all-cash sales
3) all sales are final
4) those wishing to bid must produce a cashier's check in an amount in excess of any bid they expect to make. 

The agents then hand over the checks for the clerk's inspection and noting on his list of approved bidders and the bidding begins

Four out of five homes receive no bid, or no bid above the minimum bid set by the lender,  in which case the home goes back to the lender.

One in five are actually purchased by an investor.

Why You Don't Want to Do it:

1) Because you have not been able to see inside  the homes (a "drive-by" is the best you can do), buying these homes is a significant gamble.  While most can be renovated without major expense, some will require major expense, or even be a tear down, and there is almost no way to determine that in advance.  Some are missing appliances, plumbing fixtures, copper piping, wiring (I showed one missing both furnace and water heater).

2) There may very well be renters, squatters, or even the previous owners (technically squatters since they no longer own the home) still living in the home.   They are not happy to have a new owner throw them out.  Some will not go willingly, to the point that you have to have a Sheriff's deputy with you.  Either way you'd best have a locksmith standing by to change the locks or someone will be back in the next day.

3) There may be mechanics liens or tax liens that must be paid by the buyer

4) You can not get a mortgage to buy one of these homes.  You must have cash for the full purchase price to even bid. 

The bottom line is that this is not the place for someone to buy a home to live in, nor an investor who cannot afford to lose the entire purchase price (by buying a home that requires much more repair than estimated).

One Exception:  Homes foreclosed by HUD are available for both personal and professional inspections.  You can see the ones in your area ONLY with a HUD-CERTIFIED REALTOR. 

A Much Better Way?  Buy a bank owned home that has already been through the foreclosure process.  These are not appreciably different than buying any other home with a Realtor.  As a general rule bank owned homes are sold for somewhat less than owner-sold homes, but not likely enough less to permit a profit from flipping.