Miami Dade Real Estate Scoop

This is a simplified overview of the foreclosure process in Miami-Dade County.  I am not talking statistics here, just the process itself.  I am asked about this a lot by folks who want to get into this "easy money" so here it is:

• A homeowner gets into trouble and falls behind on their mortgage payments.
• The bank will usually start the foreclosure proceedings after 3 missed payments.
• The process is started by the filing of a Lis Pendens by the bank's attorney.  If you go to the County Clerk's website you can see the Lis Pendens which have been filed.  This tells you who has had a foreclosure process started against them.  It is at this point that some foreclosure courses tell you to step in, before the property is actually sold at auction.  This is difficult to do as most folks who are being threatened with a foreclosure are not very agreeable to discussing their options with a "vulture investor." 
• Between a Lis Pendens and the actual auction of the property many months can pass, sometimes a year or more, depending on what the homeowner's attorney is doing.  Hopefully they have an attorney helping them.  I would say the average time though is about 6 months.
• Auctions take place several times a week in the same room of the county courthouse.  There are the "regulars" there who attend every auction.  Even for someone as myself (who is not a "regular") this was easy to spot.  They all know each other's names, talk too much even though the auctioneer is threatening to cancel the sale due to the noise, etc.  Some bring little folding chairs as it's usually SRO here.  It gets funny at times.
• Auctions really do start at $100.  BUT WAIT!  Don't get your wallet out yet.  They start auctioning at $100.  The bank's representative is there and they are bidding on the property also.  The reason for this is obvious.  If a house is worth $300K and the loan amount is $240K the bank wants to make sure it does not sell to anyone for less than the loan amount (plus legal fees).  I noticed the regulars would ask the bank rep at what point they would "bow out" of the bidding.  They did this to save precious time.  Who wants to be bidding back and forth for 20 minutes when the bank won't stop until they reach a certain amount anyway?  The rep answers their question and the folks who are prepared to bid that much step in and continue the bidding.  The bank stops bidding at this point. 
• On those rare ocassions when a property does sell for $100 it is only for this reason:  the property is not desired by any of the investors there (it may have been vandalized so much that the money required to bring it up to 'snuff does not suit their budget) so nobody bids on it.  The auction starts at $100.  The only party bidding is the bank, who buys it at $100 and , thus, saves on the doc stamps (a tax required on every home sold auction or not and it is based on the sales price).  So you see, the only $100 homes are being bought by banks to save on doc stamps.
• I've noticed that most foreclosed properties in this county sell for about 80-90% of their fair market value.  While this is a savings, all properties will need some repairs and further legal fees so that cuts into potential profits.  Plus, read the next one...
• A 10% deposit is required upon winning the bid.  The remaining 90% needs to be paid in cash (bank draft, cashier's check, etc.) by 3PM that day.  There is no financing these deals.  This one requirement rules out anyone but the heavy hitters from bidding.  I'm not a heavy hitter =)  I've never bid at a foreclosure sale.  This requirement varies around the country.  I've heard of places that do give you 30 days to come up with the rest of the money.  No such grace period here in Miami though.
• When you buy a foreclosed property, you buy it with whatever liens may have been placed on the property.  It is crucial to do your homework and contact an attorney for specifics.  The best advice I can give is caveat emptor - let the buyer beware indeed!