People in this area know I’m a real estate investor. I have a broad network of friends, colleagues, service vendors, bank and finance professionals, and more. On top of that, others are familiar with my business’ “We Buy Ugly Houses®” national brand, so my set of contacts is constantly growing. It happens more often than you would think that people approach me to ask what I think about buying foreclosed properties from the Hudson County Sheriff sale list. And, I don’t hedge when I tell them that there’s a lot to be concerned about when considering making a purchase from the list.
What is the Hudson County Sheriff Sale?
The Hudson County Sheriff’s office, as the ministerial officer of the court, conducts monthly auctions of foreclosed properties. Properties on the list are located countywide from Secaucus to Bayonne, but Jersey City seems to be most predominantly represented. You can sort through single-family homes, multi-family units, and even condominiums. Potential market values for these properties run the gamut. This list is updated hourly as new properties become available to auction.
If you find a property on the list that you are interested in, be ready to put your money upfront. Properties that are up for sale are advertised twice weekly in the Jersey Journal and The Star-Ledger, in addition to being posted on the Sheriff’s website and office. To participate as a buyer, you will be required to show at least $25,000 in the form of a certified check. If your bid on a property is successful, you will need to post 20% of the bid price immediately after the auction closes. Then, currently, you must pay the remaining balance between 11 and 30 days after the sale.
Is It Worth Buying a Hudson County Foreclosure?
In talking with one of the Sheriffs on the phone the other day, he told me that the list usually includes upward of 200 properties, but only 35-50 typically get sold at the auctions. Even though sometimes all the seats in the courtroom are filled with eager bidders, properties do not get bought because they pose too much liability for investors. Here’s a brief rundown of why purchasing from the Sheriff’s list can be risky:
- It’s time-consuming. You can expect to spend hours and hours sorting through the list to find a property that has the potential to be a good investment. Then, you will have to devote even more time researching the property in question and uncovering any undisclosed liens or past-due taxes.
- You will likely overpay. The banks are not allowed to announce their upset price, or the minimum price that they are willing to accept for the property. So, all the potential buyers who are vying for the property get into a bidding competition and, more often than not, pay more than they should.
- Caveat Emptor applies. Hudson County Sheriffs will not give anyone permission to enter and inspect the properties. So, you will be bidding on a house that you know little about and may unwittingly purchase one that needs extensive—and expensive!—rehabilitation.
- “Right of Redemption” laws are tight. In New Jersey, homeowners can take back their home within 10 days of the sale. Homeowners in the foreclosure process have options, from renegotiating their loan with the bank to getting financial assistance from government agencies. The New Jersey Housing and Finance Agency, for instance, offers homeowners up to $50,000 to help them save their homes.
- Prolonged pauses are possible. If the homeowner files bankruptcy within those 10 days, the sale is put on hold until the bankruptcy court makes a decision on the homeowner’s financial status. This could take months and meanwhile, your money is tied up.
- There’s uncertainty. You may have put in the necessary elbow grease to target just the right investment property on the list, but that doesn’t mean it will still be available on auction day. It is common for a property that is scheduled for auction to be removed from the list at the last minute due to redemptions, adjournments, settlements, or bankruptcies.
- Legal problems. If the property is occupied by the homeowner or a renter, it is the purchaser’s duty to remove them. That means you may have to file a court case to have them evicted. This can be a long and costly process that’s best avoided.
- Unknown added costs. Responsibility for any unpaid taxes or other liens falls squarely on your shoulders when you buy from the Hudson County Sheriff Sale List. Be especially wary of condominiums because there can be up to six months of back fees!
Are you exhausted just reading about buying an auction property? It’s a lot to take in, and actually doing it can be even more stressful. Ultimately, the risk involved may not be worth it when you can pursue other options.
Finding Leads on Investment Houses Before Foreclosure
My advice to other investors is to avoid foreclosures altogether because the time spent and risk is simply not worth it most often. The best way to find a good investment deal is to buy a distressed property before any foreclosure proceedings. It’s a win-win for both you and the homeowner; you get a good price and the homeowner gets relieved of their financial pinch. As a HomeVestors® franchisee, distressed homeowners actually approach me. They know they’re in financial hot water and are looking for solutions to their “ugly” situations, so they call the most nationally-trusted professional home-buying network of HomeVestors® franchisees.
If you are tired of chasing leads on questionable investment opportunities, get in touch with HomeVestors® today and find out how becoming a franchisee can turn your real estate investment business around.
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