Sheriff Auctions.

The sale of foreclosed properties is known as Sheriff Auctions in those US states, where the local Sheriff conduct it. These properties are often available at heavy discounts, adding to their attractiveness for small investors.

In the case of a mortgage borrower who defaults on the principal or interest repayments, the lender acquires the right to take the possession of the mortgaged property and dispose it off to recover the due amount.

• Database Search. It is very important to shortlist those properties, which meet your preliminary requirement criteria. This greatly helps in narrowing down the options further in later stages.
• Site Visit. A personal visit is always advisable to get the true idea about the property on sale. This exercise can reveal any gray areas in the terms of property maintenance.
• Legal Matters. It is always a good idea to look at the legal terms of the foreclosure agreement between the lender and the defaulting owner. This is specifically to focus on the presence of any reclamation clause. Pursuant to this, a defaulter can acquire back a foreclosed property, after repaying the auction amount and any interest thereon, to the buyer of the foreclosed property.
• Expert Advice. The legal requirements for buying foreclosed homes are much more complex than the ones applicable on other properties deals. In addition, different states in the US follow different sets of rules & regulations, and governing laws with respect to such auction sales. This necessitates seeking expert advice on the subject before taking the plunge.

• Discounts. The Sheriff Auction prices of foreclosed properties are marked much below the market price. Further, the deals are settled, as soon as the bidding price reaches to a level where the amount due to the lender is covered. Therefore, the buyers can reap huge profits in the form of discounts.
• Maintenance. Prudence is the key requirement for buying an auction property. Not only the discounts, but also the price on offer vis-�-vis the condition of the property should be given due consideration.
• Payoffs. Apart from their use for residence purposes, the foreclosed properties can also be acquired as investments. You can reap good profits on your initial investments by using a buy and hold strategy in the medium term.