Miami Foreclosure Auction

35 Replies

Hello Everyone,

I'm new at this and don't really know much about investing in real estate. I know we have a website, realforeclose, where foreclosure properties are sold on online auctions. I did some research here and there and from my understanding when buying foreclosure properties online all the liens will be "wiped out" if and only you bought the first lien. Now I have a few questions regardings this, how do I check if it is indeed the first lien and also here in Florida if the tax deed has been sold to someone else they might be able to get the house even after I bought it at the auction, how do I check the taxes have been paid in full and no one has the tax deed. The last question I have is if there are any lenders that work with this kind of property buying?

Thank you in advance!

A mtg priority, 1st or 2nd, is determined by the recording date of the mtgs.....1st one recorded is 1st.
If a tax Deed (not a Certificate) was sold, the foreclosure is moot and wouldn’t occur.....ownership changes hands with a tax Deed.
You will Not get financing for a foreclosure auction, you need full cash withi 25 hours.
Current and past taxes due will be found on the Tax Collector site.

Buying foreclosures in Florida is a risky business if you don't 100% know what you are doing. I have seen people buy properties they think don't have any superior liens and lose their entire investment. I had a friend buy a property on the foreclosure website, settle on it , and then he spent the next 60 days renovating the property. Put it on the market and sold it for a $15k profit. Then while waiting on the closing got a letter from the IRS that the prior owed income taxes and the IRS was exercising their right of redemption on the property. They gave him back the $150k he paid for the property but he lost the $30k he put into it and the $15k profit for a total loss of $45k all because he didn't know the IRS has 120 right of redemption when they have a lien against a prior owner. (Doesn't have to be a recorded lien against the property). Anyway, the only real way to cover yourself is to do a title search on the property prior to bidding on it. This can be expensive at about $100-$150 per search. No banks will loan you money secured against the property you are buying because they don't have time to to title work.. You only have 1 day to get the full payoff to the court after the sale date. You could secure a loan or LOC against a different paid off property if you have one and use that money to buy. Again though, learn first, buy after you are knowledgeable.

This is great info and a great question. I was well have been looking into Foreclosure Auction properties around the Central FL area and have heard a lot of horror stories (not to try to scare anyone off). I'm curious of anyone who has actually had success with an auction property in FL? If anyone out there that reads this has, what additional steps did you take mitigate risk?

Okay.. I do buy property at foreclosure auctions in Miami and Florida and yes it can be profitable.  It's just risky if you don't know what you are doing.. I am a licensed title agent and I can do title searches myself (without having to pay for them)   But you can still miss liens even if you know what you are doing. 

@Chudi A. As for IRS liens. They are recorded against the owner not against the property. So, you also have to do a name search.. Searching for liens against the owner as well as against the property.   The IRS lien has to be recorded or the United States of America listed as a co-defendant in the lawsuit for them to have the 120 day Right of Redemption.

You also have to learn which liens have priority and super priority.  Code enforcement liens screw a lot of people buying foreclosures.  Code enforcement is a priority lien and doesn't get wiped out.  Had one house with a $100 a day fine for the prior owner not cutting the grass.  Never got resolved for over a year and the city demanded the full $36,000 in fines to be paid just for the owner not cutting the grass.

one more thing that can throw you for a loop is subordination.  Priority of liens is determined by the date they are recorded until this is a subordination agreement by a prior lien which is fairly common. You should read or at least skim through the recorded mortgage

@Ray Slack ; If you where not licensed and trained to do all the title search before the auction, who would you suggest goes to in order to get all the ducks in the row before bidding?

Now I am going to ask everyone this question. I was following the Foreclosure auctions this morning and 2 auctions just struck me as odd.

600 NE 36th Unit#620 Miami FL 33137

543 Meridian Ave Unit#6 Miami Beach FL 33139

They sold at auction for a combined price of $400. Why did they go for so cheap any why didn't anyone else bid on them. I must be missing something about these two.

Any help for a newbie in foreclosures is appreciated.

1 of two things:
1) Likely, the Lender posted their “max bid”, say $100k on a $80k property, therefor no one bid, the bank takes it back for $100 (but was willing to bid up to $100k).
2) They were HOA foreclosures, whatever mtgs are on the property remain, and they are are more than the properties are worth.

@David Baier

Replying to your question if anyone has had success from auctions in florida... Last month Purchased this condo for 25K, currently under contract for $43,600 closing on June 22nd. No work was done sold it AS IS.

The trick to auctions is knowing what liens have priority and which get wiped out

and keep in mind if you PROFIT when you PURCHASE the property not when you SELL, you're good.

Theres also a HUGE difference between FORECLOSURE and TAXDEED auctions, be sure not to get them confused and do the proper due diligence for the proper auction.

@Andres Calderon Out of curiosity how come you didn't rehab it before selling it? Was the ARV not high enough to make it worth it or were you just looking to wholesale it, take a bird in the hand and move on?

@David Baier

They are equally complexed. They are different machines and have to be respected, this is where doing the proper due diligence is crucial. You can go from "thinking" you purchased a great property to loosing your investment capital real quick. With auctions there's no room for errors nor time to "THINK" you know something, you better make SURE you know what you are looking at. 

Both have great opportunities. I truly believe THE key factor in auctions is just being persistent. I see many people give up because nothing came up the day of the auction. If thats the case just expand into other areas. Numbers are numbers don't be afraid to expand and leave your backyard.

Even with a lawyer on your side things can easily go south with Tax-deeds... anyone within the chain of title can challenge your quiet title suit (extremely rare but it can happen).

I'm curious if anyone can explain why Federal IRS liens have a 120 day deadline? I thought Federal liens trumps even Tax-Deed auctions? What state statue allows a Federal lien to be removed? (Why would a state statue over-power a Federal lien?).

If you're going to go into Foreclosures or Tax-deeds you better be damn good in researching titles.

Tax-deeds FYI have a title report you can view for free - Its done by the National Title Abstract Company (you'll find it on the listings).

Your biggest liens will usually be municipality liens (code enforcement, housing standards ,various local agencies,etc..).

To learn how to examine titles you'll probably have to learn it on your own - I can give you the general steps and checklist that I've built up from the past year of examining titles (I'm still learning since no one wants to teach me without working for them full-time lol). (ALTA has a great sample .PDF to grounded yourself in title terminology)

If there's a big enough demand It'd be cool to have a meet-up and we combine all of our knowledge?

I have a lawyer on retainer that has walked me through the process and given me a short 101 on title research.

@Michael Randle     See Below. Plaintiff maximum Bid on each-

 $186k  on 600 NE 36th and $138k on 543 Meridan Ave ... They are too high and that is what the bank would bid up to.  No reason to bid if you are not going to go over their max bid.. Wasn't worth over that to any of the investors. 

Sold$297,285.57$186,854.00Deutsche Bank Trust Company Americas  
Sold$250,780.38$0.00US Bank NAas Trustee for the registered holders of$138,000.00543 MERIDIEAN AVE APT 6MIAMI BEACH

@Elvis Vasquez   IRS tax lien is against the person.   It's a federal IRS rule/law that they have a 120 right of redemption not a state statute/law.  Just google IRS lien foreclosure 120 day and you will see it.

Thank you all for replying and providing useful information! I only have 5k to invest so I don't think buying a foreclosure property is possible at the moment. I am looking at county held Tax Liens, not deeds, maybe that's a more realistic approach to invest? Any experiences buying liens in Florida? or where would you suggest I invest? Again thank you all!

Originally posted by @Steven Cevallos :

Thank you all for replying and providing useful information! I only have 5k to invest so I don't think buying a foreclosure property is possible at the moment. I am looking at county held Tax Liens, not deeds, maybe that's a more realistic approach to invest? Any experiences buying liens in Florida? or where would you suggest I invest? Again thank you all!

 You could buy vacant land with a 5k budget (tax deed auction). Some guy earlier this year won a 45,000 square-foot  lot of wetlands for 2.5k.

There's a few auctions coming up soon that I doubt anyone will bid on [wetlands] (I'll send ya the Folio in PM if you want) - it will probably come out to 2.4k max.

What kind of ROI are you wanting? You might want to just save up a bit more money (15k).