Nov. 3, 2022
How does the Indiana foreclosure sale process work? After a few months of non payment, the mortgage company can file with the courts to foreclose on your property. Even HOAs can foreclose for non paid HOA fees, I see a number of these every year as well. Once the lender has an official foreclosure judgement they will then preceded with the sheriff sale. Sometimes these are also called deed sales or court house step sales.
In Indiana, I would estimate that for every 10 foreclosure lawsuits filed, only 2-3 end up actually getting sold at the sheriff sale. They cancel because the owner sells the property, makes payment arrangements, or refinances. Many times these also cancel at the last minute, so you can have your eyes set on a particular property to bid on, but it ends up being canceled.
The sheriff sales are also buyer beware because you are not getting any title insurance with the purchase, or any guarantees at all for that matter. Generally you do get clear title, but if some liens are missed during the foreclosure process those can cloud your title and cause issues for resale. I have personally had this happen to me. One of the properties I purchased had a number of liens that were not cleared. Some of these properties are in terrible condition, and even still occupied. There are no inspections, although if the property is abandoned you can usually take a walk around and sometimes get inside. You will also want to be sure you are bidding on the first mortgage, and not a second mortgage or some junior lien. Otherwise you will still get stuck with the balance of the first mortgage. I’ve seen it happen several times to inexperienced investors.
Each property has a final judgement amount, and from there the bank sets the minimum bid for the property. Sometimes that starting bid is lower than what is owed, and sometimes it’s higher. The banks will assess the condition of the property in making this decision as well. If they set the bid too high and no one bids, then they take actual ownership of the property. Banks do not really want to do that because from there they have to pay to clean it up a bit, maybe make some repairs, evict any occupants, pay a real estate agent to sell it, and pay closing costs.
Alright, so now we have made it to the sheriff sale auction day and it’s time to bid. Each county handles the bid process slightly different. Some require cashiers check deposits in advance, and others just require you pay the full bid the same or next day. I participate in the Hendricks County sheriff sale, and they require them to be paid in full by 3pm the same day. Check your county for their rules. These are all cash only sales, so your funds will have to be available. If you are the winning bidder you get the deed in just couple days and then take it down to the government center to get it recorded. If it’s still occupied you are responsible for evicting the occupants through the courts, or you could try to offer cash for keys if they won’t leave on their own. From there you are all set to renovate and resell or rent your new property.
Do you have questions about Indiana sheriff sales? Feel free to send me a message or give me a call. I have purchased more than a dozen of these properties and can generally answer most questions. Happy Investing!
Related: Indiana Tax Sales Explained
