Sheriff’s Sales Utilizing Auctioneers

                                                                                              By:  Joshua W. Casselman


Most foreclosure sales are conducted by the Sheriff of the county where the real estate is located.  Indiana law requires that certain types of notice and advertising be provided prior to the Sheriff’s Sale.  These include posting written notice of the sale at the courthouse door of each county where the real estate is located and advertising the sale once each week for three successive weeks in a newspaper of general circulation published in each county where the real estate is located.  The notices and advertising are therefore highly localized and generally the Sheriff’s office will not publicize the sale beyond what is required by statute.


Perhaps, in part, because third parties are unaware which real estate has been foreclosed and when it is scheduled to be sold, the most common outcome of Sheriff’s Sales is for the creditors that obtained the foreclosure judgments to become the owners of the real estate.  This occurs when the judgment creditor bids in all or some portion of its judgment and no one bids a higher amount.  The amount of the judgment creditor’s bid is then credited against the judgment and a Sheriff’s Deed transferring the real estate to the judgment creditor is signed by the Sheriff and recorded with the county recorder’s office.


Most judgment creditors are not in the business of owning and managing distressed real estate and would prefer to have their judgments paid, rather than come into title.  Once the judgment creditor becomes the owner, it is responsible for property taxes, maintenance and insurance.  It may also assume certain tax reporting and environmental obligations, and will likely incur marketing expense trying to locate a buyer.  Accordingly, to improve the prospects of finding a third party purchaser, one option for judgment creditors is to seek court approval to utilize an auctioneer to conduct the Sheriff’s Sale pursuant to Indiana Code Sections 32-29-7-4 and 32-30-10-9.


The use of an auctioneer in appropriate circumstances is consistent with the statutory requirement that the foreclosure sale be conducted “in a manner that is reasonably likely to bring the highest net proceeds from the sale after deducting the expenses of the offer and sale.”  Under the above statutes, a judgment creditor or the debtor seeking to have an auctioneer appointed may file a motion with the Court identifying its proposed auctioneer and the terms and conditions by which the auctioneer proposes to conduct the auction, including the compensation to be paid to the auctioneer and the marketing budget.  The Court will grant the motion if it determines that the sale is economically feasible or all the creditors in the proceeding agree to both the method of sale and the compensation to be paid the auctioneer. 

The position of the creditor bringing the motion is typically that an auction sale will maximize net sale proceeds and is therefore in the best interest of all those with an interest in the real estate, including the obligor of the secured debt.  Pursuant to statute, if the motion is granted, the Sheriff must engage the auctioneer not later than fourteen (14) calendar days after the date the order is entered by the Court.  The auctioneer then schedules the auction and markets the property.  The auctioneer is required to provide the same notices and advertisements required in a traditional Sheriff’s Sale, but also conducts additional approved marketing.  Generally, the judgment creditor and auctioneer discuss and agree upon a marketing budget, the auctioneer’s fee and other terms of the sale before the motion seeking approval of an auction sale is filed.


Unlike Sheriffs’ departments, auction companies have the time, resources and expertise necessary to extensively market the real estate and locate potential buyers.  Moreover, typical auction terms provide a buyer with ten to thirty days to close on the sale, which often attracts more bidders than a traditional Sheriff’s Sale where the purchase price must generally be paid on the sale date.  By allowing the auctioneer to conduct the Sheriff’s Sale, the Indiana Code provides a potentially effective tool to generate third party interest in foreclosed real estate, maximize sale prices and eliminate the need for judgment creditors to come into title.  Real estate that a lender becomes the owner of following a foreclosure sale is generally classified as Real Estate Owned or REO property.  Additionally, if the real estate is purchased by a third party, the additional marketing costs and sales commission are paid by that third party through its bid.  In the event the auction is cancelled or there are no third party bidders, however, the judgment creditor will be responsible to pay the marketing expenses and auctioneer’s fee.  While the expense of additional marketing and the auctioneer’s fees must be considered on a case-by-case basis, an auction sale may be a preferred alternative to a traditional Sheriff’s Sale in some instances.



This article is designed to provide a basic understanding of concepts of the law. The law, however, is very much subject to change and to interpretation by different courts. Additionally, the applicable law varies from situation to situation. Accordingly, this article should be viewed as educational in nature, and not to be considered as either legal advice or a substitute for competent advice from a qualified attorney. Rubin & Levin, P.C., and the author of this material encourage that you seek independent legal counsel to address any questions pertaining to particular issues or situations which you may encounter.

RUBIN & LEVIN, P.C.  |  342 Massachusetts Avenue  |   Indianapolis, IN  46204  |



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