A sheriff’s sale can present an opportunity to acquire real estate at a potentially attractive price. But for a third-party bidder, the winning bid is only part of the equation. Before submitting your bid, you should understand exactly what you are buying and what obligations may come with it. Here are a few important items to consider before bidding at a Wisconsin sheriff’s sale:
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Check Local Rules.
Start by contacting the Sherrif’s department and/or the clerk of court handling the sale. Ask about any local rules that regulate pre-bidding requirements, including whether you need to register, provide identification, bring certified funds, or satisfy other conditions before participating. The last thing you want is to arrive prepared to bid, only to discover that you cannot participate because you missed a procedural requirement.
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Obtain and Carefully Review a Title Report
A title search or letter of title is one of the most important pieces of due diligence you can undertake before bidding. Do not assume that every lien affecting the real estate will necessarily be eliminated by the sale. Review the title information carefully to identify mortgages, judgments, tax liens, easements, covenants, and other encumbrances. More importantly, determine—typically through the assistance of counsel—which liens will actually be extinguished by the sheriff’s sale and which may survive the sale. If there are liens that will remain your responsibility post-sale, that will need to be addressed in your bid price. A seemingly great purchase price can become much less attractive if you take the property subject to an unexpected lien.
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Check for Delinquent Taxes and Assessments
Before bidding, determine whether there are outstanding real estate taxes, special assessments, or other municipal charges associated with the property. Certain taxes and assessments—particularly real estate taxes—will continue to attach to the property notwithstanding the sheriff’s sale. Contact the appropriate municipal or county treasurer and obtain current information regarding the property’s tax and assessment status. A bidder should calculate these amounts into the total cost of acquisition.
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Inspect the Property—If You Can
Whenever possible, see the property before you bid. A sheriff’s sale generally does not provide the same opportunity to inspect a property that you would have in a traditional real estate transaction. However, if lawful access can be obtained, conduct a walk-through and look for obvious issues involving the structure, roof, mechanical systems, water intrusion, condition of the interior, environmental concerns, and deferred maintenance.
Specifically, review if there are any encroachments that affect the property—like a neighbor’s garden or an old fence line. Also consider whether the property is occupied and, if so, by whom. Sheriff’s sale property is sold in its existing condition. Your bid should reflect what you know—or reasonably should have determined—about the property before the sale.
The excitement of getting a property at a favorable price can overshadow the risks associated with a sheriff’s sale. A winning bid does not necessarily mean a good investment. Before bidding, understand the sale procedures, investigate the title, determine what taxes and assessments may survive, and inspect the property to the extent possible. Spending a little time and money on due diligence before the sale can prevent a much more expensive surprise afterward.