Questions re: foreclosure auctions in Broward County, Florida.

[Hanna Essenburg]

Hello everyone:

My name is Hanna and I’m completely new to the forum / real - estate investing. Here in Fort Lauderdale, Broward County, FL the foreclosures are listed on the Broward County Clerk site - https://www.broward.realforeclose.com/index.cfm

In order to participate in the auction, bidders must register on that site and place a deposit equal to 5% of the estimated high bid for each property they anticipate winning at the sale for the bids to be considered.

I’ve been following some of the online auctions and below is a

sample property from the auction site on March 1, 2016

Auction Type:	FORECLOSURE
Case #:	CACE-08-039390
Final Judgment Amount:	$241,814.22
Parcel ID:	514012AH0080
Property Address:	1096 N HIATUS RD 8-1096
PEMBROKE PINES, 33026
Plaintiff Max Bid:	Hidden

___________

Auction: Sold

03/01/2016 10:27 AM ET

Amount: $84,500.00

Sold To: Plaintiff (from the Case #: CACE-08-039390 , we can see that the Plaintiff was US Bank and the final judgment was recorded on 10/28/2013 11:54:35 AM)

_______________

My question is, why would the bank have to purchase the property; doesn’t a foreclosure automatically mean that the property reverts back to the bank?

Also if the final judgment was recorded three years ago (October 28, 2013) and the property was finally sold on March 1, 2016, what happened during that interim period -- ie. Looking at the Parcel ID info (514012AH0080) which brings us to the County Appraiser’s office, it appears that the homeowners still had the property address as their mailing address. Since apparently the owners were not evicted, couldn’t they have sold the property before the foreclosure proceedings?

Thank you in advance for helping me understand the foreclosure process.

[Joseph Perez]

I really hope someone responds go you soon! This is a great question, and I would love to know myself being new to the game as well. Perhaps the $84k was the principal left on the property and the final judgement amount includes original principal plus and interest that would've been gained? 

I hope you don't mind me piggybacking on your question so I can get notified if someone answers, this is a great inquiry. 

[John Thedford]

No. The only way a property goes back to lien holder is two ways: either at public auction where lien holder is high bidder OR borrower signs deed in lieu of foreclosure. 

[Wayne Brooks]

@Hanna Essenburg The property doesn't automatically revert to the bank. As you have noticed, the final step in a foreclosure is a public auction. If a bidder bids more than the bank is owed (final judgment) then they get the property for that price. In this case other bidders only bid up to $84,400. The bank could have let it go for that price, meaning they get $84,400. Apparently the bank thought they'll be able to get more for it as an REO, so they kept bidding, and took it back at the auction. Sometimes the bank will decide how much they will accept at the auction, something close to FMV, and will stop bidding at that point. Sometimes they will reveal this max bid, and other times they won't.

[Hanna Essenburg]

@Wayne Brooks . Thank you for your answer.  Does that mean that the bank actually pays the court $84,500 for the property or is this just a "number" that the bank used to take back the property?  After all, the bank doesn't have to pay itself does it? Will the bank then use the $84,500 as an asset to put on their books?  I came across a great youtube video that explains: "How To Legally Spy On Banks And See Thier REO Inventory " -- since banks are required to report their REO Inventory on a quarterly basis to the FDIC.gov, one will be able to use the info when negotiating with banks.

[Wayne Brooks]

That's all just total BS, that maybe justo ounces good. The bank will hire their local agent, get a couple of opinions of value, and try to sell it for the most money they can".....period.

[Hanna Essenburg]

@John Thedford.  Thank you for your answer.   Your answer leads me to another question: "why didn't more borrowers sign over their deeds rather than go through the foreclosure process?"  I would think that even though at that point the bank could evict them, the two parties could have agreed to allow the former owners to rent the home from the bank. 

[Lynn Bown]

I deal with foreclosures all the time.  Most owners are scared, avoid the phone, dont read notices and just hope it will all go away.  Since they are behind they usually cant afford to move either and dont want to be homeless.  Most banks offer 1500-3500 cash for keys with deed in leiu if they just leave it broom swept and tidy. But most owners are not aware or just dont ask for this.  On the rent issue the other problem is that owners have learned it it a long process and if they just hide they can stay 9 months up to  3 years I have seen rent free.  This make them a risk for the bank so cash for keys or deed in lieu is safer for the bank.

[Account Closed]

The bidding process used to be at the courthouse. You had groups that were separate but worked to keep others out. Now, they would have already talked to the bank so the bank would bid $100.00 and no others would bid and the bank would take back the property. So, if you would bid they would bid you up and out of the market.   Now they do it on line but you do not know the high bid. Be careful not to over bid on a property.

[Hanna Essenburg]

@Lynn Bown. Thank you for your explanation. At times, I am somewhat conflicted about buying a foreclosure. I mean from an investor's perspective, it's great if one can get a good deal, turn it into a rental and get some cash flow. On the other hand, I may be "profiting" from someone else's misfortune. Based on your experience, would you recommend bidding on an auction or buying a bank's REO?

[Account Closed]

From my experience in the South Florida market in Broward and dade County is very difficult to buy at auctions I would concentrate on the reos the short sales or finding motivated sellers in the county

[Hanna Essenburg]

@Account Closed. Thank you for answer. So if I understand you correctly, when the bank bids $100 (or a higher amount) that number is simply used as a "place holder" until the bank decides that a third party bid has reached an acceptable amount. If a property was "sold" to the bank for $100, would that property's title reflect the $100 "purchase" price? Also if one were to purchase that same property later on when the bank sells it as on the open market (REO), would the bank issue a warranty deed for the property?

[Hanna Essenburg]

Thank you everyone for taking the time to answer my questions.

@Joseph Perez.  Hi Joseph, I noticed that you live in Hollywood.  Are you familiar with the

Broward Real Estate Investors Association? 

Their address is 1660 NW 65 Avenue, Suite 1, Plantation, FL 33313. I was thinking of joining the group. The first meeting is free (you would need to sign up) and they have an upcoming event: "Everything You Need to Know About Hard Money Lending – Sponsored by Asset Based Lending" on Thursday, March 10, 2016 @ 12:30 pm - 2:30 pm

[Wayne Brooks]

They're okay, but they're heavy on promoting their own coaching/partnering program.  The networking is generally the most beneficial part.  As for the auctions, you can easily see how competitive they are by browsing thru the past auctions, seeing what you think a property is worth verses what it sold for, to a third party.

[Account Closed]

The bank takes the property  and clears title then sells the property with clear title

[Account Closed]

to answer your question, when they bid the 100.00 that is the winning bid none of the parties bids against them because they owe so much on the property.

[Hanna Essenburg]

@Wayne Brooks.  Thanks for your feedback on

Broward Real Estate Investors Association [BREIA].  Aside from real estate investor meetups are there any other local groups that you would recommend joining? Currently, I'm reading a lot of great info on BP's older threads, esp.

Foreclosure Auction (Sheriff Sale and Trustee Sale) FAQ and starting to realize how much there is to learn. Again to everyone who took the time to answer my questions, thank you so much for your help.

 

[Account Closed]

@Hanna Essenburg The other thing you have to keep in mind is that there are times where a property has a number of liens attached to it. I have heard horrible stories of first time buyers thinking they got a steal at an auction only to find that the liens associated with the property were MORE then the price of the house. The ONLY time I would bid on a property for auction is if I knew an area really well (an area you farm or have a very firm idea of market) AND did a full title lien search before the auction. The price of a title lien search is very worthwhile as it can prevent you from purchasing a total disaster. The great thing about REO's is that once the bank takes the property, they clear up any title issue. So you know you are getting clean title.

[David Sicherman]

a huge portion of our customers buy at the south florida county foreclosure auctions. ALWAYS, Always and always do a lien search first! I get customers that do a search AFTER they already won bidding and don't understand that they didn't just win a $400k house for $25k since they just bid on a HOA lien or other junior lien.

[Hanna Essenburg]

@Account Closed. Thank you both for your perspectives. If buying an REO from a bank guarantees a clear title, then I guess they've resolved some of the issues from 2010, where Title problems – banks won’t warrant title to their own, foreclosed properties.

Unfortunately, according to Consumer Affairs -- Foreclosure Lawsuits (against banks) are still  ongoing.  As both of you pointed out, doing due diligence means that I need to use my own title company rather than rely on bank's info.  Finally, buying an owner's title policy is definitely an expense I should budget for. Thank you again for making me aware of potential pitfalls.

[Account Closed]

@Hanna Essenburg Youre welcome. Yes you should always do a title search regardless if the bank owns property. Good luck