Buying a Foreclosed Home in Florida
If you have a tight budget not permitting you to buy a desired property in Florida, it is a prudent idea to go for a foreclosure property. Florida is a state where foreclosure is a judicial procedure. This means that a mortgage lender must initiate foreclosure proceedings through a court of law. In normal circumstances, the foreclosed property is sold to the highest bidder at a public auction. Here is a complete guide on buying a foreclosure property in Florida. Be prepared to try your luck at not one but several such auctions as it is not necessary to win the auction easily. It is said that one should not become emotionally attached to a property being auctioned if he feels bad once he fails to win the auction through his bid. Many a times auction gets cancelled if the owner files for a bankruptcy or settles the issue with his lender by paying his dues.
Buying at a pre-foreclosure stage
As is the case with foreclosures, it is often the best time to buy a property when it is in a stage of pre-foreclosure. This is when prices are low and there is very little competition. If you wait till the time when a public auction is organized, you may end up paying a much higher price and face a stiff competition from other bidders. You need to find out properties that are in this stage and then contact the owners to express your desire of buying their homes. It is better to inspect the property from your own eyes and then contact the owner through a broker. The owner may find the idea of selling his property to you better than listing his home on the market. He is also tempted in this sale as it preserves his credit rating.
If however, you fail to buy a home at a pre-foreclosure stage, you can set your eyes on a foreclosure property.
Steps for buying a foreclosed property in Florida
- Learn about foreclosure properties in your area
Go through the listings of foreclosure properties in the Florida area where you live. Lenders carry out advertisements about public auctions of foreclosed properties. You can also call banks in your area to inquire about foreclosure properties.
- Inspect the property before taking part in the auction
This is an important step in buying a foreclosed property. In Florida, you are not allowed to inspect the property from inside and you must buy the foreclosed property in as is condition. However, there is no restriction on you to inspect the property from outside. Get the address of the property from the auction company and pay a personal visit during day time to take a close look at the house from outside. You will get a clear idea of whether the home is in a good condition or not. Take part in the auction process only if you are happy with the condition of the house. In some cases, the house being auctioned is still occupied by tenants who may not be cooperative with you.
- Determine maximum amount that you can bid for the property
You need to calculate the maximum bid you can offer for a property before attending any public auction. Go through the auditor records in your County to know the sale prices of comparable properties sold in the area in recent times. You can reduce this value by about 20-25% to secure a deal that is profitable for you. Make sure you are not overpaying for the foreclosed property as it becomes an unprofitable investment for you.
Meet the representative of your lender on the day of auction and show him the proof of the earnest money deposit you are going to make to take part in the auction process.
- Get your finances ready
If you do not have the total amount in your bank account, it is better to obtain a prequalification letter from a lender. This helps in moving quickly to buy the property when your bid has won at the auction. This letter in your hand at the auction makes your bid serious and increases your chances of buying a foreclosed property. It is a good idea to call up the auction agency to inquire about the earnest deposit that you must pay to be eligible to take part in the auction. Auction Company requires you to pay a sizeable amount of the winning bid on the day of the auction. Court takes 10 days to issue you the Certificate of Sale in case your bid has won. You must pay the remaining amount of money within a specified time period. This is the reason why you need to have your finances ready to complete the purchase process. During the auction, always keep your maximum bid amount in mind and increase your bids to increase the bid amount made by your competitors in increments. It could be increments of $100 at a time or $1000 at a time depending upon the value of the property being auctioned. Once your bid has won the auction, complete the transaction according to the directions of your lender’s representative. You also need to submit the money to pay the earnest deposit. Just remember that this earnest deposit is non refundable at this point of time. You must complete the remaining steps according to the terms of sale contract within a period of 30 days.
Request for the copy of the sale contract once your bid has won at the auction. You will be required to fill up this contract of sale and review it. Ask your attorney to go through its terms and negotiate for changes that may be harmful to your interests. Keep in mind that the seller is also represented by his attorney and any changes in terms are possible if his attorney agrees to them.
Finally, you should not wait till the time when the property becomes REO or bank owned. This happens when the property fails to get sold through auction.