Attention Lakeland FL Investors who are thinking about bidding on the court house steps or online. Thinking about getting a great deal, think again. This article here by Jon Zolsky provides you with some great tips on how to start.
Foreclosure auctions are two words packed with testosterone adrenaline. Everybody have the idea about the foreclosure auctions and often they want to know when and where.
What, Why and How is usually missing. I have seen people telling me that they are in Daytona for 3 days, and where to go and buy something dirt cheap between sunbathing in the morning and bar drinking in the evening…
I am not even talking about those who truly believe in a concrete block 2K+ sq. ft. home in Port Orange for $5,000, and who have very difficult time with the notion that if this was true, the Deed would have already been in my name… but I digress.
So, how do you prepare to buy at auctions?
First, you would learn a lot by going to the auction without a penny in your pocket and just watching. And after the auction is over, sit at a computer in the courthouse and check records, and check case activity. You do it until you start understanding what is happening. Who is the plaintiff, and who are the defendants. What is the amount of judgment? When was the Summary Judgment rendered? If there were a few postponements, the amount owed to the HOA or COA (Condo-owners association) may be higher by the time you bid.
What date is today is important, as if the summary judgment was recorded in August and now it is November, there is new property tax on the table, and foreclosure auction does not wipe out the tax, so you need to know that.
Check the taxes, whether they have been paid. Make sure the property is not scheduled for tax deed sale, as whoever gets the Tax Deed would be in the first position…
Watch how the auction is run, how they conduct the sale, how they read. Make sure you would have the printouts so that you would not be guessing what property they are talking about, as they do not go by the addresses. Make sure you know when is the last moment you can bid, or the clerk would tell you “Sorry, sir/madam. I is sold”. And if you think that it is being conducted the same way everywhere, you are wrong.
Learn the procedures. How much money and in what form would you need. For example, in Volusia County the auction starts at 11 AM and by 2 PM they should have all the money. So, learn where the banks are. The closest to the Courthouse in Deland is Wells Fargo right across the street, so I have an account there to guarantee that I would not be late.
And I am not even talking about learning the inventory. You can’t just trust the computer. You have to pay a visit to the property and see if this is what you would be comfortable with. Make sure you understand the value. This is critical. What you would like to sell it for later is not the value, it is a dream. Value is what other similar homes in this area are sold for, but make sure you adjust for repairs, which you can only guess at this point. You may see how the roof looks like, and what electric service goes to the house, but you do not know whether the AC unit is working or even there.
Specialize. Choose you type of property. I am only buying condo-hotels and condos. My investor once wanted a house, and we got one. Was a decent deal, but we ended up losing about $5K on it. Wasn’t that much the lesson for me, but was a huge lesson for the investor. Now he is not getting into the real estate part. What he likes or doesn’t like is irrelevant. What will make money is.
Notice who bid on those fixer-uppers. Usually guys with background in construction as they can do the work themselves without paying others for doing it. Also you will see real estate agents, as they know the market and they save on selling costs. Pay attention to groups, where you have agent, builders and title specialists bundled together.
Keep in mind that you are against people who do it for living and do it for years now. Coming there practically every day. Be careful as if you outbid them at the auction, this may signal that you paid too much.
To make money buying at the foreclosure auction, you need to bring more to the table than just money.