Friday, I went to see what happens at a sheriff sale in Bergen County. There was a property I had some interest in, but it ended up being taken off the calendar, and I was not really prepared to bid anyway.
Amid the horror of families trying to save their homes, there is a very perverse process in which people discover that their homes will sell for $100. This is because the bank announces an upset price at the beginning of each auction, and for some reason, the bank’s prices are always very high. It is not clear to me why banks would rather leave the sale owning properties that they will eventually sell at a much lower price than taking the cash a fair auction would generate.
Another issue with these properties is the general difficulty in doing due diligence, sure one can do a title search before the sale, but what about physical inspection of the premises, finding out about tenants and the like. I would go into this process expecting to be disappointed or coming out with a property that is truly worthless. Bear in mind, in NJ, foreclosing on a property does not allow you to evict the tenants, they have a right to stay.
Talk to an attorney or other professional before attempting to make a bid at. Sheriff sale, it could otherwise be an expensive mistake.