This is a topic I’m shocked has taken us so long to blog about.
We’ve been attending the Marion County Sheriff Sale since 2005.
And - wow - do we have stories to tell.
Lot’s of them, which we may decide to do in future blogs.
But, to start, I thought I would use this blog to discuss the basics of the Marion County Sheriff Sale.
Sort of a “Marion County Sheriff Sale for Dummies” blog.
Note: I’m obviously not a lawyer, not an expert on foreclosures, so I’ll provide a VERY basic overview of the process.
What is the Sheriff Sale?
The Marion County Sheriff Sale is simply a foreclosure auction.
It’s not a tax sale. Marion County has those too, but it’s a completely different sale with its own rules.
Basically, the Sheriff Sale is the final step in a lien-holder's foreclosure process. As part of the foreclosure requirement, the lien-holder, generally a bank, puts the property for sale using the Civil Sheriff’s Department.
From the perspective of the lien-holder, one of two things can happen:
- The bank, as a result of the process, gains title through a Sheriff’s Deed.
- If anyone in the public attends the sale and bids on the property, it’s sold to the highest bidder.
In the second scenario, the bank obviously doesn’t gain title, but receives the proceeds of the sale up to the judgment amount.
So, a quick scenario…
Joe buys a home and uses a local bank to obtain a mortgage. The mortgage amount is $100,000.
Joe loses his job, gets sick, whatever, and falls behind on his mortgage payments.
Calls are made.
Demand letters are sent.
Joe still doesn’t pay.
The bank will then open a foreclosure action against Joe. This involves a lawsuit, where a judge will hear from both parties (assuming Joe shows up) and then makes a ruling.
Note: Federal law generally requires lenders to wait until the borrower is at least 120 days late before filing a foreclosure lawsuit. In Indiana, the borrower must be provided the opportunity to enter into “settlement conference” with the lender in an attempt to modify or get current with the mortgage.
Let’s assume all that occurs and the bank wins the foreclosure lawsuit, is awarded a judgment against Joe for $95,000, and the judge sets the house for sale at an upcoming Sheriff Sale.
Sometimes this process can take as little as several months.
Other times it takes a long, long time for a bank to finally foreclose.
We’ve seen scenarios where it’s taken well in excess of five years before a bank finally gets the home to the sale.
The Marion County Civil Sheriff’s Department will organize a list of homes each month for sale.
Obviously, there’s a lot of work that goes on here and I don’t begin to know all the details.
There are some major foreclosure attorneys in the state and, each month, they must provide all the details required for the sale, including opening bid amounts, which are THE key numbers for investors.
In some cases, the attorney may order a Broker Price Opinion (BPO), where a licensed Real Estate Broker will visit the home (and may or may not get access) and provide the attorney with a current market value.
I don’t know what percentage of homes actually receive a real BPO, but I’m sure that many do not. In those cases, the bank will simply instruct the attorney to run the home through the sale at the full judgment amount.
Generally, banks interested in getting rid of the home as quickly as possible will place a value on the home that may make sense for investors.
That way, assuming the home sells at the auction, the bank has received some funds and they don’t take on the added burden of maintaining the home and working with a local Realtor to ultimately sell it.
Most banks don’t want to own real estate, so many will take their lumps and move forward.
Several days before the sale, the Sheriff’s Department will publish a list of the homes available for sale. You can purchase the list online or you can pick-up a hard copy (who does that anymore?) at the Civil Sheriff’s Department, which is located on the 11th floor of the City County Building.
The list contains the basic info on the property, including:
- Cause #
- Judgment amount
A lot of people take the list and start their research right away. This may include reviewing sale comps around the property, doing a drive-by and, yes, where applicable, entering the home, assuming it’s vacant.
Don’t ask if this is legal or not… just saying it happens.
Currently, the list is tiny… maybe 150 homes, many of which will be removed by the time the sale actually occurs.
Tiny, that is, by comparison.
Back in 2008-2010, at the peak of the financial crisis and housing meltdown, the list would sometimes exceed 1,000 homes.
Yes, more than 1,000 homes.
While there were many, many options, it was an overwhelming list to review.
In Marion County, the Sheriff Sale is currently the 3rd Wednesday of each month.
The auction occurs on the 2nd floor of the City County Building.
The afternoon before the auction, usually LATE afternoon for whatever reason, the Sheriff’s Department emails the opening bids to its distribution list. If you want added to the email list, you’ll simply need to ask.
At this point, you frantically match-up the bids to your research and determine if the property is a deal, or no deal.
This often involves a trip to the property (if one hasn’t been made) and doing as much research as possible in a very short period of time.
If you find something that you want to purchase, you’ll need to bring certified funds, made payable to the Marion County Sheriff’s Department and place them on deposit.
In addition, there’s a bid form you’ll fill out.
All money and bids are due by 2 p.m.
For homes that receive bids, an oral auction is conducted, which typically starts around 2:15 p.m.
Again, if the home doesn’t receive any bids, the bank will receive title to the home.
Note: If you have funds on deposit, you can technically bid on any home that goes to oral auction. Be careful, however, to not overspend. Spending money you don’t have will get your banned from the Sheriff Sale.
Here’s an example…
Let’s say you plan to bid on auction #23 and #145.
When you arrive at the auction, you find that #23 already has a bid and will go to oral auction. You find that #145 doesn’t have a bid, so you fill out the bid sheet for it.
You are free to bid on #23, but keep close tabs on your money, because if no one bids against you on #145, it’s yours, and you have to have enough money left over to pay for it.
There’s definite strategy and money management involved, particularly if you are going after multiple homes.
You Bought a Home, Now What?
If you are lucky enough to purchase a home, you can take possession right away assuming the home is vacant.
If it’s occupied, there are a whole set of rules you have to follow which I won’t detail in this blog.
Several days later, you’ll need to retrieve a Sheriff’s Deed from the Sheriff’s Department and have the deed recorded to “consummate” the deal, so to speak.
Current Climate of the Sheriff Sale
We still work every single sale.
We get the list, we do our analysis and, when applicable, we attend the sale.
But, we RARELY make purchases any longer.
As I noted above, the list is small and the competition is overwhelming.
There are investors down there, generally who are there with large funds, who will essentially pay retail prices.
For those of us who are there to buy, fix and sell, it’s a no-win situation.
But, hey, if you enjoy the auction environment, enjoy doing lots of research, enjoy running around reviewing properties, enjoy running to your bank to get money, enjoy running downtown to attend the sale only to never even open your mouth to bid, I highly recommend it.