Recently, I listed a home that a first time investor had rehabbed. She had purchased the home without any real estate counsel. She also had purchased the home from a sherrifs sale and the property was transfrred via a sherrifs deed.
While there are no absolutes in life. the set of circumstances I just layed out are absolutely the wrong thing to do. There's nothing wrong with buyin with the intent to rehabilitate to resell. That's arguably one of the safest and most profitable investments of yesterday and today! What was wrong with what this seller did?
#1
Without real estate counsel the public generally doesn't know accurate real estate values and or procedures. When this seller purchased there were homes in the mls that may have had a larger margin of end of the day equity. Which means more money in that investors pocket at the end of the day. A good realtor will prepare a market analysis for an investor that will be a good indicator of the profit margin
#2
The public and some realtors with lesser experience and learned realtors tend to believe that a sherrifs deed is equivilent to a "owners policy" deed (which's the safest policy to indemnify a buyer from lien loss down the road. ) The fact is a sherrifs deed guarantees no such thing. You see liens are recorded on properies. Regardless of ownership liens transfer. In the specific incidence I'm sharing with you the seller incurred the cost of old utility bills as well as some personal income tax of the prior owner. This situation could have easily been avoided by the investor having their own independent title search performed.
Generally a buyer can upgrade to an owners policy. If the title company the sherrifs dept. uses does not allow you as a buyer to purchase an upgrade on the title policy, I have one advice-walk away! That's a sure sign the property does in fact have liens. In Ohio a sherrifs deed can filter liens off the property but the research has to be done correctly. But generally all buyers of sherrifs sale properties are assured is the property will not have liens on it from the time of repossesion to sale. Anything before that is no guarantee.
To avoid this and many other costly mistakes-"call a realtor!" As a buyer generally there are no fees to you for buyers agency service. If you have any questions, comments, or concerns about this or any other real estate matter call me. I'll be happy to assist you!