Buying a House in Florida at Auction
July 2, 2020
Whether for flipping or personal use, buying a house in Florida at auction can get you a house below market value. Florida, like most states, is a judicial foreclosure state. As such, homes that are foreclosed on typically go to auction. Anyone who has the capital can bid on the house. However, buying a house in Florida at auction is very different than a traditional home purchase.
A Guide on Buying a House in Florida at Auction
You usually have to pay in full immediately after winning the auction. This means you must either have a lot of cash or are backed by someone who does. People and companies that buy houses for cash can get a great deal but may have to wait a while to capitalize on it. Here is a guide on buying a house in Florida at auction.
- Do a Foreclosure Search
You can find bank foreclosure listings and auction listings in several ways. Sometimes a google search in your area will suffice, like ‘bank foreclosure listings near me’ or ‘foreclosures Naples FL.’ To give you an edge over the competition, you can do more in-depth research, such as:
- Search bank websites for bank foreclosure listings
- Search the Department of HUD lists of foreclosed homes
- Review public records at your county office
- Pay for a foreclosure listing service
- Do Your Due Diligence
Most foreclosures come as-is, and chances are, you won’t be able to conduct an inspection. In fact, you probably can’t even enter the home. But you can still do your due diligence. You should do a title search, and drive by the property at the very least. If there are liens on the house or a leaky roof, they are your problem as soon as the proverbial gavel announces you as the winner. You won’t feel much like a winner if your investment turns into a money pit because you didn’t do your homework.
- Get Cash Lined Up
Most auctions require you to pay a nonrefundable deposit. If you win, you need to pay in full almost immediately (usually the same or next day). So, you can’t scramble after the fact to get the money. If you don’t have the cash lying around, you can turn to investors, retirement accounts, or others. But remember, you don’t know exactly what you’re getting yourself into when you buy a house as-is. You must consider the risk!
- Show Up and Bid
Familiarize yourself with the sales process for the different auctions you plan to attend. Set a bid limit and stick to it! If you win, seal the deal by following the procedure to a “T.”
- Be Patient
Even though you have paid in full, it could take days or even weeks to get the Certificate of Title. Do not proceed with any work or move in until you have this title in hand. During that time, the homeowner may have the opportunity to redeem the property. If that happens, you will get your money back but would not be reimbursed for any money you put into the home in the meantime.
Is Buying a House in Florida at Auction a Good Idea?
With any investment, there are pros and cons. The biggest pro is you can purchase a house at less than market value. You could have plenty of equity built-in to rehab for yourself or to resell. However, there is a lot of risk with buying at auction. Most notably, you don’t really know what you’re getting yourself into since you’re buying it as-is without an inspection. There can also be complications with evicting the previous homeowners or losing it back to the homeowners.
There is a great alternative, especially if you are new to the game. You can team up with companies that buy houses for cash. They have the capital, experience, and know-how to get the best deal with the least amount of risk. Or, you may be able to buy a house from them that is still below market value but without the challenges of an auction. Best of all, you could finance the purchase instead of pay cash.
Tropic Coast Homes buys distressed homes and sells homes in southwest Florida. If you want to buy a home at a great price without the risk of an auction, contact us today.