The basics of buying a house at an auction

house auction

Real estate auctions can be real fun, particularly if you are looking for a bargain, and don’t mind the extra legwork. But you do need to understand how the auction works and navigate the purchase without help from real estate agents. In short, buying properties at auctions is risky, but it could end up being a good deal.

How do properties end up at an auction?

Without going into unnecessary boring details, let’s just say that there are usually two ways in which properties end up at a real estate auction in Florida.

  • Foreclosure auctions: When a homeowner fails to pay the mortgage of the property for a continuous period of time, the property ends up in foreclosure, and the bank files a notice of default. If the homeowner isn’t able to pay up the balance owed or negotiate the mortgage with the lender, the latter can put the home up for auction.
  • Property tax default auctions: Another way properties end up on the auction block is when the homeowner fails to pay the property taxes. In this case, it’s the tax authority and not the bank, which seizes the property.

Auctions are generally held in person, but at times can also be held online. These are typically run by a sheriff or a county official, but can also be run by companies that specialize in auctioning real estate assets, on behalf of the banks or the tax authorities.

The pros and cons of buying a house at an auction

Buying a property from a real estate auction in Florida is a completely different experience than buying the traditional way. Most people who might want to take part in such auctions are generally quite affluent and can afford the risks.

Pros – 

  • Perhaps the biggest benefit to owning a house from an auction is the possibility of getting it cheap. In theory, you can purchase the property for as little. As the amount owed to the bank or the tax authorities. Making it of much interest to real estate investors.
  • While it’s easy to buy properties by going through real estate listing websites. Not many people are interested in auction properties, and even few know how to actually participate in the auction.

Cons – 

  • When you buy a property from an auction. You may not be able to go for a home inspection, and thus eventually have to conduct expensive repairs or even deal with liens.
  • To take part in the bidding process, you may have to pay a refundable cash deposit in advance. If you finally do outbid others, you would have to pay via cash, a certified check, or wire transfer immediately. This may be a problem for some. However, only in some cases, you might be able to finance the purchase and avoid the problem.

Finding real estate house auction in Florida

One way of finding real estate auctions is by approaching local governments directly or simply going through. Their website and then following up over the phone. However, we recommend Foreclosures Daily. The site categorically lists properties in pre-foreclosure and even contains the data for the listing, including photos. In fact, many real estate investors prefer it over reaching out to agents and brokers. They aren’t always eager to help as they don’t earn a commission on live auctions. If you are eager to pick up a bargain at an auction. There’s a lot to learn, and thus Foreclosures daily is a great place to start.

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