I am currently in SWFL and as some may know a lot of properties are getting bid up, some with as many as 50 or so bids on one property.
I came across a wholesaler who is buying properties at the auctions steps and then has a set fee that he takes for the property. He has a team of people who research everything and they guarntee in writing that title is clear and there are no leins etc.
I however wanted to ask all of you here what needs to be researched before buying a property at auction because I take what people tell me with a grain of salt, so I wanted to get input from more people.
I understand buying property at auction has a greater risk because you can not inspect it and it is truely as-is, but people are doing it so I am trying to learn the steps needed to take before going to auction.
Just a few preliminary thoughts - this is a beginner list and of course not all inclusive.
1. What recourse do you have if title is not as they say? How deep are their pockets if you have to sue? You will want to do your own title research first - sort of a "trust but verify" scenario.
2. If vacant then you are lucky. If vacant when you see it but not when they first bought it make certain they took proper steps on clean out etc. When you take a home at auction you do not automatically get their "stuff" too. Make certain everything was handled properly and documented properly.
3. Make certain the sale looks "clean" and "makes sense". If buying from an HOA sale or sale from a 2nd mortgage - these can be overturned by a judge (first mortgage sales can be also but not as often) - so know what you are getting.
4. Certain liens can carry over after a sale. Some mechanics liens etc are not always extinguished.
5. You will have to pay up the property taxes. Not everyone remembers to check this and understand there may be thousands owed.
6. Certain IRS and other tax liens may remain and carry on the property - have your title rep check this.
7. Do not take any "out of the ordinary" properties. Major code or environmental or building and safety violations carry over to the new owner (that's you) - stick to the easy stuff.
- Those are some initial things to think on.
There are several things to research before bidding at auctions, to wit:
- My first thing I check is if the property is already vacant or not. If it is still occupied then you will have to evict them and you are fully vulnerable to whatever they do in the house before they move out. Next is check the Market value â€“make sure that it is a good deal. The remember that all liens will fall off after the foreclosure, however IRS liens have a 4 month redemption, this is a something to make note of because you canâ€™t remodel anything until the redemption period. Last, estimate the needed repairs - Estimated repairs should be factored into any property purchase, but thereâ€™s an added twist with auction properties. In most states, auction bidders donâ€™t have any opportunity to view the inside of the property before they bid, let alone hire a professional inspector to inspect the property. You may be able to approach the current occupants and ask permission to view the inside, but permission is not guaranteed. So just make an estimate based on what you see on the property while viewing from the outside and know that the inside is always worse.
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