There are many homes for sale in Florida, but it’s not easy to find real good deals. Real estate auctions are a great way to buy property in the Sunshine State at a reduced price. But how do they work? Here is a guide on how to buy an auction house in Florida.
Real estate in Florida: a thriving sector
A perfect climate, palm trees in every corner, beaches, ocean and tropical atmosphere … But Miami is not only this!
The real estate sector offers great investment opportunities, thanks to the advantageous taxation, the flexible purchasing conditions, the high returns guaranteed by the rental of the property and the increase in value when the house is sold.
But how to buy a house at a good price, investing a minimum amount of capital, but maximizing profits?
How do Florida Property Sales Work?
Houses can be auctioned for different reasons; for example because the owner has not paid the mortgage for several months or has not paid his property taxes for a long period of time.
There are two types of auctions:
- Lender Confirmation Auction (auction confirmed by the bank):
it is an auction in which the highest bid must be approved and accepted by the bank or credit institution affected. The offer must be high enough to convince the lender.
- Absolute Auction: the highest bid automatically wins the auction, and there is no minimum price for the sale of the house.
During the auction, the auctioneer will announce the various amounts of offers with the increase of the stake. Once the final price is reached, i.e. when there will be no further offers, the auction will be closed and the holder of the highest bid will win the house.
If you win the auction, the cash deposit that you originally made will not be reimbursed, as it would correspond to an advance on the payment of the house.
If payment can not be made within the deadlines set by the terms of sale, you will lose not only the right to the property, but also the deposit.
There are many search tools and sites that list properties for auction.
You can take a ride at the property of your choice to already take a look from the outside, see the neighborhood, and maybe even meet the owner or neighbors.
If you particularly like a property, it is advisable to do a little research to make sure it has no debts or mortgages.
Avoid false hopes
The former owner always has the option of paying the remaining amount of the loan before the final sale of his house, so check that it is still available before starting the process. Similarly, some auctions take place online and others on site, so periodically check that the house is still there.
To understand the auction procedure, it is advisable to attend some auction in your neighborhood, in order to directly observe its operation.
Learn about the additional costs requested by the auctioneer and those related to the acquisition: they could be very high. Get ready, because once you win the house, you will have to buy it immediately, in cash or, more often, with a bank draft.
The starting price may be equal to the residual amount of the former owner’s mortgage, or at least a low enough price to encourage offers.
In general, properties are sold at a loss. If the price obtained is high enough to repay the loan, the profits will go to the old owner.
Let the auction begin!
By participating in an auction, you never know what kind of property you are buying exactly.
However, buying at an exceptional price is often sufficient to offset the risks.
Moreover, the purchase of a property at auction is very fast: you will avoid the long weeks of negotiations and negotiations, you will already know the dates of sale and closing and all buyers are bound … So, no surprises!
But be careful …
Often the debt of the former owner does not end in the mortgage to repay.
It may be necessary to repair or renovate the house or incur other related expenses such as a second home loan or various debts
For this, it is important to make sure that the property is “clean” and free from any restrictions or mortgages.
Also, be sure to visit the house before launching any offer.
Finally, make sure that the former owner is no longer at home, because starting with an eviction process is never pleasant.
By itself, a real estate auction is often synonymous with a good deal, provided it is well prepared and conducted appropriately.
Good to know: Even if you are not American, you can always participate in a real estate auction, as long as you have an identity card and valid documents for registration.
Picture Credit: paulbr75