The $100 County Auction – Part 1 of various

Real estate, at least in Florida, has become a hot market again. Everyone wants in and it shows on Real Estate ‘Auction’ sites like Auction.com and Hubzu.com. Previously, these sites simply worked with banks and “auctioned” their REO inventory, but now everywhere you go, you’ll see these $100 minimum bid auctions being advertised on these sites and others like Zillow, Trulia, and Realtor.com

Hey I want a $100 property, how do I get into this advertised action?

The foreclosure and REO industry is big and complicated, with many ways to profit and many ways to get burned. I won’t go into all the ins and outs of the industry and how to profit, but I would like to touch on these $100 auctions. County auctions are where a property’s foreclosure auction actually takes place. Yes, every county in every state holds these auctions on a daily basis. Each county has its own set of rules about the days and times they auction properties, as well as whether they hold their auctions online or in person. Any county in which you would like to participate will have those rules set up generally on the Clerk of Court’s website.

So, what are the steps I must follow to be able to bid?

If the county you want to participate in conducts their auctions online, you will need to create an account with that county before you can bid. Once your account is created you will need to fund it, percentages vary, but let’s say your county requires a deposit of 5% of the offer price. So what that means is that you have to put 5% of your maximum possible bid into this account, otherwise they won’t let you bid. You’ve decided you only want to bid on properties that cost $50,000 or less. You will need to add $2500 to your account. If the county you’d like to bid on has in-person auctions, you’d better come with a pocket (or briefcase) full of cash, it will be handed out at the close of the auction.

OK, I’m ready, on my first auction.

In online auctions, there are two ways to bid: you can set a maximum bid and let the software increase your bid as you are outbid, or you can view the auction in real time and bid manually. So, you’ve done your research and found the home you’d like to bid on… Did you receive a title report prior to the auction? Wow, more on that in a later post.

Today 30 houses are auctioned, his property is #17. So wait, wait, and property #11, two people are manually bidding on each other and waiting until the last second to make their bids, so this property that should take about 5 minutes is taking 20 minutes. What these two don’t realize is that you can’t make a sniper bid at these county auctions, the clock is reset. So you watch them for another 5 minutes and someone finally concedes.

OK, here we are at Property #17. There are too many scenarios to talk about, so we’ll cover a few assuming you’re bidding manually.

• Same scenario as #3, but this time you win the auction for $47,500. Congratulations, but you’re not done yet. Your dream property does not have a maximum plaintiff bid, is appraised at $60,000 and has a final judgment of $45,000, great, you can get in on the action. The offer starts and jumps to $45,100. OK, the plaintiff (most of the time the bank) can no longer bid, why don’t you ask, well that will be another post. Time is ticking and you bid $45,800, the bid price rises to $45,500. The clock ticks. The offer price goes up to $45,900, all of a sudden someone outbid you. You make another offer of $48,000 and the offer price goes up to $47,500, now you are winning. The clock is ticking, it’s almost yours, no, the bid price goes up to $48,100, you’ve been outbid by someone who thinks they can bid you, the clock starts over. This happens for several minutes until the other person exceeds your $50,000 bid limit.
• Your dream property says the plaintiff has a maximum stated offer of $35,000, is valued at $60,000, and has a final judgment of $36,000, excellent, you can get in on the action. The bidding starts and jumps to $55,000. Shucks, I guess you’ll have to try again.
• The dream property says that the plaintiff has a maximum stated offer of $75,000 and the property is valued at $100,000 with a final judgment of $75,000. Wow, I guess I should have seen it before spending all that time and effort, you can only bid up to $50,000 with your deposit.

I won, now what?

You won your auction for $47,500. Most of the time, the auction will email you directly after the auction you won with a request for the total you owe (not just the $47,500) but also the fees. If you have $48,000 in your auction account, simply log in and pay. If you only have $2,500 in your auction account, it’s time to move. Now you have to go to your bank, get the extra funds so you can take them to the county courthouse, deposit those funds, then go back to your computer, log in and pay the amounts online. In many counties, you only have until the end of the day (4 pm) to pay the funds. Otherwise, you will be banned and the property will be put up for auction again. Now wait 10 days for the deed and proof of purchase. That is if you don’t just buy a subordinate link.

I lost, now what?

So you’ve lost your auction. Unless you want to outdo everyone and money isn’t an issue, get used to it. There are many competitors in these auctions, including banks, and a lot of money that is used. Do your research, stick to your highs, and you’ll get there eventually.

future publications

• doing your research
• Rules for the plaintiff
• Coming In – Securing Your Vacant Profits, Oops, Yours Came With Tenants, WOW, Not What I Expected To See.
• Possible problems with your winning auction – Who are all these people on the defendant’s list? Right of Redemption – Homeowner and IRS, Title Reports, Did I Just Win a Subordinate Lien? HOA and equity lines
• property taxes