Real Estate Agent · Orlando, FL · Member since 2015 · 177 posts · 54 votes
Good afternoon BP,
I want to start buying from the foreclosure auctions in my county here in Florida. Lots of activity on those auctions though and typically get bid up higher then my MAO.
I know how to find the owner and contact them directly but what is the process to buying directly from them prior to the auction date? Is it pretty straight forward or is there a ton of hoops to jump through first?
Real Estate Agent · Fort Lauderdale, FL · Member since 2018 · 44 posts · 16 votes
8y
You would want to know what liens are on the property and what the payoff figures are for each lien. This includes mortgages, HOA’s, city violations and code enforcement liens, etc.
Have a title company take a look at the title for you (I would not recommend going off of the seller’s word because sellers oftentimes have a lien that they “forgot about” or did not know was a lien on their property). From there, obtain payoffs on all liens and make sure your offer will cover closing costs and all lien holders will be paid in full.
If your offer less closing costs will not net a full payoff to the lender(s) and lien holder(s) then you are falling into short sale territory which is going to require you to obtain approval from the lien holders to release their lien and settle on the debt without obtaining a full payoff.
Both can be completed, but it depends on the specific situation and the status of the upcoming auction. Short sales will take you more time overall to obtain the necessary approvals to close.
Hope this helps.
Real Estate Agent · Orlando, FL · Member since 2008 · 551 posts · 159 votes
8y
It would be the same process as any other FSBO sale you just need to close the transaction prior to the auction. The seller would need to make enough from the sale to satisfy the debt of course. If the purchase price is less than the debt then you have a short sale situation which would involve asking the lender to postpone the sale so you can go through the short sale process.
Real Estate Agent · Fort Lauderdale, FL · Member since 2018 · 44 posts · 16 votes
8y
You would want to know what liens are on the property and what the payoff figures are for each lien. This includes mortgages, HOA’s, city violations and code enforcement liens, etc.
Have a title company take a look at the title for you (I would not recommend going off of the seller’s word because sellers oftentimes have a lien that they “forgot about” or did not know was a lien on their property). From there, obtain payoffs on all liens and make sure your offer will cover closing costs and all lien holders will be paid in full.
If your offer less closing costs will not net a full payoff to the lender(s) and lien holder(s) then you are falling into short sale territory which is going to require you to obtain approval from the lien holders to release their lien and settle on the debt without obtaining a full payoff.
Both can be completed, but it depends on the specific situation and the status of the upcoming auction. Short sales will take you more time overall to obtain the necessary approvals to close.
Hope this helps.
Real Estate Broker · Naples, FL · Member since 2013 · 9k+ posts · 6k+ votes
8y
Sure you can do it. Time is of the essence. I purchased one three days before the auction BUT initiated the transaction weeks earlier. Getting payoffs, etc from the lien holders can be a slow process. ALWAYS close through a title company so any outstanding liens, judgements etc are paid at closing.
Real Estate Agent · Orlando, FL · Member since 2015 · 177 posts · 54 votes
8y
Perfect, that is what I was curious about. Initial question answered!
When you are looking at these auctions, how far out do you typically start? I'm sure the process takes time and trying to initiate a deal a day prior won't work so are we talking 2 weeks, a month, 2 months?
Perfect, that is what I was curious about. Initial question answered!
When you are looking at these auctions, how far out do you typically start? I'm sure the process takes time and trying to initiate a deal a day prior won't work so are we talking 2 weeks, a month, 2 months?
You can approach owners anytime. Earlier is better IMO.
Flipper · Fort Myers, FL · Member since 2017 · 182 posts · 98 votes
8y
it has to be at least two weeks before the auction date. it is a process to stop the auction. i got some house from auction when owner was trying to sell it before auction. but certificate of title issued before the owner stop the process
Real Estate Professional · West Palm Beach, FL · Member since 2012 · 23k+ posts · 13k+ votes
8y
A lender has No obligation to stop a foreclosure, period. But, 2 weeks should be plenty of time to get a pay off, run title and close Before the auction date.
Flipper · Fort Myers, FL · Member since 2017 · 182 posts · 98 votes
8y
@Matthew Rollo depends on the lender . And depends on the amount of the debt. But most of the time lender won’t stop it since it is the last step to cash the property. Why should he stop it and wait for the unknown?
Paradise, CA · Member since 2015 · 1k+ posts · 871 votes
8y
Jut make sure it's not a short sale. If it is, you'll have to have the property listed and be exposed to the general open market, which is what your post stated you were trying to avoid in the first place.
Real Estate Agent · Fort Lauderdale, FL · Member since 2018 · 44 posts · 16 votes
8y
It definitely depends on the servicer and who ultimately backs the loan. Some servicers are easier than others to work with in regards to getting a sale cancelled. If the lender is to get a full payoff, they're usually on board to get all their money. If the payoff is going to fall short and you want to pursue a short sale, it really comes down to whether the bank thinks they'll make more money foreclosing or if they could make more money approving a settlement via a short sale.
Because there are so many moving pieces to a short sale, the sooner you are able to get in front of these homeowners - the better. The day a lis pendens is recorded, these homeowners are BOMBARDED with mail from foreclosure firms, BK attorneys, investors, realtors - you name it. The sooner the homeowner is on board to work with you - get started. Waiting until the last minute or right before an auction (especially in a short sale situation) is not going to do anyone any good.
Lake City, FL · Member since 2018 · 16 posts · 7 votes
8y
Hi Matthew! Investor in Florida here. Most of what I go after is at foreclosure auction. If we want to make an offer to the bank prior to auction, we generally have our realtor or attorney send an offer to the attorney for the plaintiff (bank). Keep in mind, if it is close to auction date, they may not even entertain it or pass the offer along. I have seen auctions cancelled just days before, so it is possible to get an offer in and have it go through a full review. Always do your research though on liens or encumbrances that may be on the property. When I first started, I couldn't compete at auction with the more established people, so I had to try to snipe what I could. It is a good way to get something at a great deal. Keep in mind, final judgement amount isn't an indicator of what the bank wants for it. It is possible to make an offer before auction date and have it not accepted, and then pick it up at auction for way less than you offered.
I picked one up two weeks ago at auction. We knew competition would be fierce for it. I had my attorney offer their attorney 60K. Final judgement amount in the case was 86K. Plaintiff's attorney declined it, said there wasn't time to do a full review and they were proceeding to auction. I had attorney send another offer for 70K, carbon copy reply to that one. One week later at auction, I picked the house up at 65K. Agent for plaintiff told me afterwards his bid-to number was 57K. If it weren't for other investors bidding, I could have potentially picked that one up for 3K less than I initially offered.
Long story short, contact owners and be polite. Present it as an option to prevent foreclosure and help them. Don't sell it as just that, because you are in the business of making money also. They can usually steer you to the attorney or bank that has initiated the foreclosure. Reach out to them and make the deal happen, but do your research. Don't get discouraged, it is a tedious process, but you can do it. Hit me up if I can help or if you have any questions.
If foreclosure auctions are your game, then go to every single one. In Orlando I am sure competition is brutal. Where I live, there are times I may be the only investor that shows up. If plaintiff hasn't given the bid-to number to the agent or doesn't want the property back, there is a chance that property goes for $1000 or less. Those are nice properties to pick up and cash flow on quickly.
Real Estate Broker · Naples, FL · Member since 2013 · 9k+ posts · 6k+ votes
8y
It took well more than two weeks to get payoff. Attorney fees were escalating, etc on top of bank fees, interest, etc. I would be hesitant to try and get it done two weeks before sale. Get it under contract early, hire title company, and let them get it done for you. BTW< I believe in FL lender has 15 calendar days to provide payoff. In my case, there was a 1st, second, and legal to get a total due. In any case, it was several weeks before we got the final amount due, and that was FINALLY provided four days before the auction. Approaching owners and buying before auction knocks out the competition.
@Matthew Rollo depends on the lender . And depends on the amount of the debt. But most of the time lender won’t stop it since it is the last step to cash the property. Why should he stop it and wait for the unknown?
Make seller an offer that covers the mortgage. Bank cannot refuse a sale. Again, time is of the essence.
Real Estate Agent · Orlando, FL · Member since 2015 · 177 posts · 54 votes
8y
Competition is brutal in Orlando and the auctions are online with an option to set a max price and have aut bids done on them. So it is very difficult to purchase off the online auction. I am aware of a couple of counties that do it live still and the amount of people that go to these is a lot smaller.
Obviously getting in touch with the owner months before is the most ideal situation.
I may have read some of the comments wrong but is it more advantageous to contact the owner or the bank?
It took well more than two weeks to get payoff. Attorney fees were escalating, etc on top of bank fees, interest, etc. I would be hesitant to try and get it done two weeks before sale. Get it under contract early, hire title company, and let them get it done for you. BTW< I believe in FL lender has 15 calendar days to provide payoff. In my case, there was a 1st, second, and legal to get a total due. In any case, it was several weeks before we got the final amount due, and that was FINALLY provided four days before the auction. Approaching owners and buying before auction knocks out the competition.
That may be the state timeline rule but federal rules (trump state rules) require payoff to be submitted within 7 days of request. Do servicers miss the deadline? Yeah. Do requestor mess up the request, extending the processing time? Yeah. The rule though, is seven days. Does anyone go after the servicer for violating the rule? I've not seen it in my area, or heard about it, yet.