Buying properties at an auction can provide an opportunity to find unique and profitable real estate deals, but at the same time may have some disadvantages that can cause financial loss to the investor. There are several things to look for and to cover while looking for properties at auctions in order to minimize your risk and maximize your profits. Always exercise caution at real estate auctions as what may seem to be a good deal may turn out to be a money pit, always do your due diligence and check all the details.
Source of Auctions
Most counties in Florida auctions properties in two ways, either by Tax Deed auctions for unpaid taxes, or Foreclosure auctions for monies owed on liens and mortgage notes. Most of these auctions are held online. For example in Palm Beach county, Tax Deed auctions and Foreclosure auctions are done on this site https://www.mypalmbeachclerk.com/services/property-sales and in St Lucie county they are held on this site https://www.stlucieclerk.com/services/auctions/tax-deeds. For other counties, you can do an internet search of those counties followed by “tax deed auction” or “foreclosure auction”
Organize upcoming Auctions
For the county’s auction you want to participate in, you may want to organize a list of these upcoming properties for the auctions in a spreadsheet or an online lead management system. Dealcollab has most of these leads added already for you to track and make notes on. Alternately you can choose to add these leads to any other lead management system. It is recommended that you use a lead management system like Dealcollab or any other platform as this manages updates of your leads much better than a spreadsheet.
Acquiring properties before the auction
It is possible to acquire these properties before the auction, you may choose to contact the property owners before the auction to negotiate a purchase before the property goes to auction. You can choose any of three ways to contact the homeowner, by phone, mail or a door knock. For contact by phone you can use a skip tracing service or free sites online to find phone numbers. The mailing addresses will be listed on the property appraiser's website if you do choose to contact my mail.
Due Diligence Time, Research physical Aspects of the Property
This is where it gets interesting, you have to verify and confirm all physical aspects of the property. If there is a house on the property, you should verify that it is indeed there. Also verify the current condition to determine if it is a total demolition or to determine the extent of repairs needed. You will need to do a drive by the property, connect with a professional in that target area, or use a proxy visit service as the one offered on Dealcollab http://dealcollab.net/requestproxyvisit. Confirming the physical condition of the property will give the most accurate price you will be able to pay for that property.
It gets Better
As with checking and confirming physical aspects of the property, it is also important to research financial liabilities that may impact the property. It is important to check what liens, code violations, mortgage notes, and any other items that may encumber the property. You may need to order a title report that shows this data, this is a preliminary to getting a title search. Some leads on Dealcollab may have this information. For some code violation liens, the municipalities imposing these liens may work with you to reduce or remove these liens. Keeping close tabs on items that encumber the property will paint a clear picture on the maximum you will be able to bid on these properties.
Be sure to monitor the properties as it gets closer to the auction, you will find some properties get canceled from the auction list as it gets closer to the auction date. This may be due to property owners paying the amounts owed to stop the auction, or from investors purchasing these properties. Also be sure to set a maximum you will pay for each property and look at what similar properties have sold for in previous auctions.
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