Going from cash to financing at auction?

Question

Good day, I am wondering how do people buy homes at auction. I know that seems like a basic question, I guess I'm really wondering where the money comes from?

I'm in Florida, and there are still many foreclosure auctions in my area, a few in my neighborhood. They all are cash only auctions, but the websites don't describe how they really work. I don't have the cash, but might be able to come up with a 10% down payment on the quick. I know a lot of these buyers are mortgaging these properties, I just can't figure out how. Thoughts?

Wayne Brooks · Answer

For the actual foreclosure auctions in Florida, full payment is due the same or the next day, period. For an REO (already been through the foreclosure, the bank got it back, and now they are auctioning it off) most allow financing, assuming the property is in good enough condition to qualify for financing. You'll find these on hubzu, auction.com, etc.  Get your preapproval for financing set up First, and you'll be in a better position.

Kevin Reid · Answer

Also are their particular companies that will mortgage this type of deal, or will any.

Kevin Reid · Answer

I did find some more info. The property I was looking at requires a down payment of at least 5% after winning, but the balance including fees need to me delivered by noon the next day. It's auctioned through the county site.

Looks like I'll keep looking around. I know Hubzu allows financing on some properties, but can be a pain to deal with and has limited inventory. What are some other decent sites to look at? I have an amazing credit score and good income so getting a mortgage will be the easy part I think.

Christopher Phillips · Answer

@Kevin Reid

Most online auctions have deposits within a certain time frame and you can do financing as long as you can close in 30 days. The down payment % will depend on the lender or auction requirements.

For Sheriff sales in Florida, it depends on the county. Some counties you have 30 days. Others, you need to pay by 3PM on the same day. Deposit % depends on the auction rules and is usually based on the price of the home.

A large percentage of the Sheriff auctions end up with the lender. The lender's send their own people to the auctions and they have the purchasing power to outbid everyone if they aren't getting the price they want. For the rest, you have to have the cash ready to go, which could be pooled from investors or cash from a business.