If you are looking for a way to purchase a home in Florida at a discounted price, buying a foreclosure may be an appropriate option. In Florida, mortgage lenders must pursue judicial foreclosure, a process in which the lender initiates and executes foreclosure through a Florida court. Sale of a foreclosed property occurs at a public auction, where the home goes to the highest bidder. Following the proper steps can help you successfully purchase a Florida foreclosure.
Review newspaper listings in the Florida area where you want to buy a foreclosed home. Lenders must typically advertise foreclosure auction sales in a newspaper with general circulation in the home's area.
Call banks and mortgage lenders to inquire about public foreclosure auctions in your target area. This can help you learn of auctions you may have missed in area newspaper advertisements.
Determine your maximum bid price for a foreclosure home. You can calculate your maximum bid by researching recent sales of comparable homes in the same neighborhood through county auditor records, and reducing the home's estimated value by 10 to 25 percent. Deciding on a maximum bid before attending a Florida real estate auction can help you avoid overpaying for a foreclosure home.
Obtain a prequalification letter from a lender if you plan to use borrowed funds to purchase the foreclosure home. You will need this letter to bid at a foreclosure auction.
Call the auction company handling the sale and ask about any payment necessary on the day of the sale. If the auction company requires you to pay a portion of the sale amount if you place the highest bid, arrange to obtain a certified check from your bank.
Participate in the auction by bidding up to your maximum bid amount. If you place the winning bid, pay any amount necessary to secure your bid and complete the financing arrangements, if any, to pay for the home.
Allow 10 days for the court to review the sale and issue you a Certificate of Sale. If the court determines that the home did not sell for a fair price or that the auction was improperly handled, it may order a second auction.
Conduct a visual inspection of the home from the street before attending the foreclosure auction. Although you cannot enter the property until you purchase the home, you can obtain an idea of the home's condition from outside the property.
Avoid becoming emotionally attached to a foreclosed home before sale. A foreclosure auction will not occur as scheduled if the owner files bankruptcy or successfully negotiates with the lender to keep the home. Also, Florida provides a right of redemption until the time of the sale, which allows the owner to reclaim the home by paying the mortgage balance and foreclosure costs.
Avoid waiting until the home becomes real estate owned, or REO; in Florida, this occurs when the bank or lender takes possession of the home after an unsuccessful auction. REO homes are typically priced at or near market value to compensate the bank or lender for the unpaid mortgage amount, foreclosure costs and upkeep.