5 Tips to Buy at a Sheriff Sale in Illinois
Sheriff Sales in Illinois
Sheriff sales in Illinois can be a lucrative way to quickly build wealth as a real estate investor, but, have their drawbacks :
- Require all cash to purchase
- Typically, you can not get into the property to see damages or repairs needed
- Require a thorough review of Title for the property to make sure the buyer is not buying a property encumbered by liens
- Is an auction process in which the property goes to the highest bidder
- Highest bidder must wait, AT LEAST, 30 days to give the previous owner the opportunity to redeem the lien upon purchase
- If in an HOA, purchaser typically must pay the last six months of HOA dues.
So…is buying at a Sheriff Sale worth it?
Absolutely! However, you need to know what you are buying and that is the hard part.
As with any real estate investment, factoring in the cost to rehab the property is critical. If your renovation dollars are too low, you will be out of money quick and have no equity position.
So, performing your due diligence and making sure you are purchasing a distressed asset with enough equity is the most important part.
Purchase the Primary Lien
However, making sure you are not buying a secondary lien is also important. For example, you will ALWAYS want to make sure you are purchasing the first mortgage on the property. If you purchase the second lien (i.e. : Home Equity Line of Credit) on a property, you will not own the property and will not see your lien paid by previous owner.
What if You Purchase a Property that has NO EQUITY after Repairs?
That’s where having quality property management is a good option. Having the ability to flip your new property or rent your property is important.
Click here to see the property management options our office can provide in the Chicagoland area.
What if the Investor Does NOT Have ALL CASH to Buy the Property?
A few ideas here :
- Talk to your local bank about options in obtaining a personal or business line of credit
- Talk to a private lender about obtaining a line of credit to draw
- Look into hard money lenders
Keep in mind, all of these options require some form of interest being paid to another entity.
Thus, factoring this cost into your overall cost of purchase will be CRITICAL.
So…how does an Investor get a List of Homes that will be in a local Sheriff Sale?
This day in age, the best way to obtain a list is to search the sheriff website for the particular county you would like to purchase within.
Here’s a sample : Dupage County Sheriff Sale Listings
As you can see, the address and judgment amount is listed. However, the STARTING BID PRICE is not determined until 24-48 hours prior to the sale itself. Most of the time, this starting price is lower than what is owed. Sometimes, it is higher!
Regardless, obtaining this starting bid price is critical in understanding your equity position.
Then, at the sale itself, the purchasing bidder typically must bring certified funds of 10% of the judgment amount, payable to Sheriff Department, just to show good faith in having the funds to bid on the property itself.
What is the best way to get STARTED in Sheriff Sales?
We recommend checking the Sheriff Sale County webpage every week and to just start attending the sales themselves.
Get a feel for the process, the starting bid price, and the bidders in the room.
Network with the bidders and make new friends. You may find opportunities within the investors in the room themselves!
If we can be of further assistance, you may always contact us and we can provide you further ideas.