Sheriff auctions are considered to be the ultimate source of bargain property. They are not the same as Bank Repossessed Properties, which may seem like a good deal at first glance, but they usually do not offer the same value as properties sold at sheriff auctions. Heres why:
Banks try to sell repossessed properties for more than they paid at a Sheriff Auction
In order for a property to be repossessed by the bank, the bank first has to buy it at a Sheriff Auction. The bank would do this when they feel that the price offered by other buyers at the auction are too low and that they would be better off buying the property themselves and then trying to resell it at a higher price. This means that repossessed properties will be offered to the market at a higher price than anyone was prepared to offer at the auction. Buying at a Sheriff Auction cuts out the bank (and their higher prices!)
There is less competition Sheriff Auctions
Sheriff auctions are not as well marketed as bank repossessed properties, which means that there is less competition among buyers. This leads to lower prices as there are fewer bidders driving up the price.
More Research means to lower prices
Another reason sheriff auction properties are sold at large discounts is that there is no official way to view the property. This means that buyers need to conduct their own research, such as viewing the property from the street, enquiring with neighbours or obtaining permission from the occupiers of the property to view internally. Buyers who havent done this research are less likely bid on the property.
A little known fact
Banks would MUCH rather let a property go for cheaper at a Sheriff Auction than have to buy the property and resell it later. It saves them from having to pay marketing and holding costs.