Homebuyer assistance for Davie Florida home buyers

Buying properties at auctions

Buying properties at auction certainty has its advantages but the pitfalls are plentiful.

Shopping for real estate is always a trial, but buying a property at an auction-whether it’s a Foreclosed unit sold by a lender or a new condo offered by a developer comes with a special set of problems.

Auctions are poised to become an alternative to conventional purchase strategies as bargain hunters seek to take advantage of the worst U.S. housing slump in 16 years.

South Florida has become one the most hardest hit areas of the nation, because of the cheap arability on money early in the decade, condo developers launched dozens of projects across the region, especially in downtown Miami. Now thousands of the new condos are coming on the market and developers are facing a glut of units either unsold or abandoned by; their buyers.

Auctions of foreclosed properties and excess developer inventory produced mixed results last year. At some auctions, almost nothing sold; at others, there was a buyer for almost every unit.

Some buyer’s priced out of the market during the housing bubble now have the opportunity to acquire homes at there true market value, But bargain hunters need to educate themselves to avoid trips to court or buying an unsuitable property.

On of the things to look out for is the “buyer premium” which is a 5 or 10 percent premium that is added to the final bid by the auction house to pay for there advertising and other expenses. Buyers often get caught up in the buying frenzy and forget about this extra expense.

To resister to bid, buyers are required to provide on the day of the auction a check which has to be certified funds or a cashier’s check for the amount of the buyer’s premium. Unsuccessful bidders get there check back, checks of successful bidders go toward the purchase.

Successful bidders’ must deposit 10 Percent of the final sales price at the auction and close within 30-45 days. The contract is not contingent on obtaining financing. If buyers fail to get a mortgage they lose there deposit.

Every auction house has its own rules tat are available to buyers well before the auction. Some auctioneers even hold workshops to educate potential buyers.

The challenges of buying houses and condos at auction go beyond understanding the terms of the auction. It includes researching the condo complex and the individual unit to be bid on

In a down market there are many variables that need to be taken into consideration before biding. A bidder needs to research the percentage of foreclosed units in a building and the number of homeowners who are behind on there maintenance fees. A high number of foreclosures or delinquent dues can impact the bidders financing on the deal.

Lenders may require lager down payment or increase the interest rats of a loan if they think the property is risky.

Lenders are aware of the fact that the condo association could go broke if the dues are not paid and this could cause property values to fall in the entire complex.

When a lender forecloses on a property in Florida, it takes part in a foreclosure sale at the courthouse. If it finds no takers there, the lender buys the property and either auctions the property off or contacts with a real estate brokerage to market the property as an reo.

Auction sales are not contingent upon inspection, so it is important to inspect the unit before bidding on it. This is sometime difficult to do but I would recommend making this inspection before biding, if you are unable to make the inspection yourself you may want to consider paying a professional to do so for you.

Developers are warming to the idea of selling fast and at a discount rather that continuing to pay carrying cost, which for those who are willing to do there homework before buying could save them a lot of money on there home purchase.

James Loftis P.A./Realtor,Broker Assoc,CRS,GRI,EPRO

www.RealEstate911.com