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The conventional method of buying a home is to contact a real estate agent and view several houses before deciding. But there is an alternative.
Every week the Hamilton County Sheriff’s Office auctions properties that have either gone into foreclosure because of failure to make mortgage payments or been seized because of unpaid property taxes.
The auction is a gamble, because property is sold “as is” and there is no open house prior to the sale, according to Sgt. Rick Snow, who runs the auctions.
“I tell my friends, family and anyone that asks me not to buy a house from the sale,” he says. “There’s no way to inspect it.”
Everything but a driveway
A prospective buyer can drive past a house to view the exterior, but the only way to view the interior is by asking the current owner or resident. In most cases, they refuse. Looking in the windows is trespassing.
Doing research through the Hamilton County Auditor’s office can help. A prospective buyer can look up previous owners, tax liens and foreclosure information.
Sale prices for houses range from $15,000 to $1 million. The allure of reduced prices draws a large number of inexperienced bidders.
“There’s too many risks involved buying a house from the auction,” Snow says. “This is not like a late night infomercial where you spend $1,000 and make $100,000. The average citizen doesn’t have the money to repair a house.”
For the past five years Snow has been execution officer for the sale and has seen the pitfalls of buying property at the auction.
“Several years ago one individual spent two years in court hearings and $25,000 in lawyers’ fees because the former owner of the property kept filing frivolous lawsuits against the new owner,” he says.
Snow says another person recently purchased a house for $250,000 only to discover the builder went out of business before he installed a driveway — and the only access to the house is via the neighbor’s property. The neighbor doesn’t want the new owner trespassing on the property, so the new owner has no legal point of access to the house.
Extreme cases like this don’t often occur, and most of the time a sale goes off without a hitch.
The auction begins with an appraisal of the properties for sale. Snow and three other appraisers inspect the properties and determine their values based on several factors, including location and recent sales of properties on the street. Last year the department appraised 52 properties a week, selling 1,943. Only 65 properties got no bid. Snow says a property very seldom goes unsold.
Every Tuesday The Cincinnati Court Index lists the properties that will be auctioned by the sheriff’s office. The auction is at 11 a.m. Thursdays in the Hamilton County Courthouse in the hallway in front of room 260.
The sale is frequented by investors, contractors looking for a good deal and mortgage companies and banks trying to re-collect on a loan.
“Occasionally an individual from the neighborhood comes to invest,” Snow says.
Snow conducts the sale from a makeshift podium near the courthouse elevators and stairs. Several clerks process payments and titles for the sale. The minimum bid is two-thirds of a house’s appraised value.
No guarantees
The sale is underway. The houses at 1226-1230 Rutledge Ave. are up for sale. A judge in Common Pleas Court has set the minimum bid at $60,000. The bidding reaches $75,000. Fierce competition drives the price to $79,500.
“Sold! For $81,000,” Snow declares. “Finally! This building has been around for two years.”
The court or the mortgage holder set the terms of sale: either a 10 percent deposit of the sale price or payment in full. Personal checks, cashier checks and money orders are the only forms of payment accepted.
“This is not a case where you bring a letter from Fifth Third Bank stating you were approved for a loan,” Snow says. “Bring money to buy — and there are criminal consequences for checks that bounce.”
The sales carry no guarantees; if you buy it, you own it. If a sale doesn’t generate enough money to the pay the balance of a foreclosed mortgage, the previous owner usually ends up forced to pay a “deficiency judgment” to the mortgage company.
Depending on the number of houses for sale, the auction can last several hours. Attendance varies; on Jan. 8, more than 100 people were on hand. One hundred eighteen houses were sold, with banks buying back 107 properties.
Judy and Bruce Leever are seasoned veterans of the auction and have been buying, rehabbing and renting property for more than 15 years. The couple is realistic about the hazards of buying property at the sale.
“It’s a big risk buying property for cheap,” Judy Leever says. “Sometimes it’s not always vacant and you don’t know if you’re getting a good title on the house.”
Repairing a house can be very costly. Leever says she and her husband have bought houses where all they had to do was replace the carpet. At other times they had to spend several thousand dollars to make repairs. The Leevers enjoy their unconventional profession and say the rewards outweigh the risk.
“It beats having a job, and we’re not on anyone’s time schedule,” Judy Leever says.
Snow has advice for anyone considering bidding at the auction.
“Do your homework,” he says. “Come down and watch before you participate, but buyer beware.” ©
This article appears in Jan 21-27, 2004.