Use caution when investing at sheriff’s sales
Because of the redemption period, it’s important for real estate investors to be willing to wait out the period between the auction and the date they take physical possession to begin any improvements. The risk of losing the value of any improvements to redemption exists. Technically, you don’t have a clean title to the real estate, so you can’t prove your exclusive ownership for other purposes.
You won’t be able to get a loan against the property because the title you have is considered “clouded.” In plain terms, there’s no way to guarantee that someone else can’t come in with a prior ownership claim and take all or some of the property from you. Again, the risk is minimal, but it’s not zero.
Many times, real estate sold at a sheriff’s sale is purchased by the very bank that is foreclosing on it. This is due to a couple of factors, but the most important one is that a lot of times, people just don’t show up to these sales. They’re often at inconvenient times and require you to put up a great deal of cash upfront immediately before you can even access the property to assess its value.
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