Buying Properties on the Courthouse Steps Not What You May Think

Not a week goes by that we don't hear from a buyer for a property in Southwest Florida who says, Oh, I'll just go try to buy a property on the courthouse steps and get a really good deal." There are a few localities in our area that have the distinction of being some of the most active foreclosure markets in the country, so this can be expected. However, what an eye opening experience these buyers encounter when they try this approach.

Most think they can get a Naples or Bonita Springs property on a shoestring budget and that is just not the case. While the courthouse steps are a place where in the past you might find a property at a bargain price, those opportunities are mostly non-existent in today's environment and if you're not careful you could lose your shirt if you don't know what you're doing.

So, let’s do a review of exactly what is going on with the situation in today's terms and also go over some of the more important things a prospective buyer needs to be aware of if they're going to try this approach.

First, this is no place for novices. Each week day at 11AM the county clerk holds their auction of court ordered sales and there are usually more than enough very savvy pros around who will gladly devour the inexperienced newcomers like a school of sharks in a feeding frenzy.

Second, the Banks are there too. Their representatives are typically setting the minimum winning bid on the properties they own far above the real market price; and, as a result, almost all of the properties are ending up going right back to the bank that held the original mortgage in the first place. This is where the novice buyer thinking they can get a deal is making their biggest mistake. They all seem to think the banks just want to unload these properties and be done with them. Not only are the banks out the amount still owed from the original mortgage, they are also out all of the costs of foreclosing on the property, too. And, with many in Washington still talking about some form of a bailout, the banks are simply not motivated at this point in time to just eat these outstanding balances and sell the properties to the highest bidder at a fair market value.

Third, you must do your homework and know everything there is to know about a property you are bidding on. For instance, do you know for sure all of the debts that are secured by the property? There's no worse deal than getting a property at auction for say $50K only to find out later that it has $100K in an outstanding mortgage balance still owing on it. Truth be told, that is just one of many pitfalls. Others include things like unknown defects, non-existent appliances including AC units and well equipment, zoning issues, survey problems and unpaid back taxes. The list can be extensive and the inexperienced buyer can get into a world of financial hurt if they don't do their homework.

So, what are novices looking for a deal supposed to do? Here's a list of recommended items from the Lee County Clerk of Courts website to get you started.

• LEGAL NOTICE: All properties scheduled for a mortgage foreclosure sale are published in the legal notice section of any Lee County newspaper. The legal notice will provide you with the legal description, the names of the parties and a case number.
• INSPECTING RECORDS: The Civil Office of the Lee County Clerk of Courts has the files available to review on the second floor of the Lee County Justice Center, 1700 Monroe St. in downtown Fort Myers.
• TITLE SEARCH: You can do a title search on a piece of property in Land Records on the second floor of the county Administrative Building at 2115 Second St., Fort Myers.
• CALENDAR: A calendar of upcoming foreclosure sales is available on www.leeclerk.org.
• TIME: Sales are at 11 a.m. in the Civil Lobby on the second floor of the Justice Center.
• PAYMENT: A deposit is due at the time of sale from the successful high bidder equal to 5 percent of the final bid. If the successful high bidder fails to make the deposit, the clerk will immediately resume the sale starting with the second-highest bid. All deposits of sale proceeds must be in the form of cash, cashier’s check, money order or U.S. Treasury check payable to the Lee County Clerk of Court. In addition to the amount of sale proceeds deposited, a court registry fee is due on the total amount of the deposit. The balance of sale proceeds must be paid to the Clerk by 4 p.m. on the day of the sale. If final payment is not made by the prescribed time, the judgment holder will be required to obtain a court order rescheduling the sale.

Most clients initially scoff at us when we try to tell them things are not what they think when it comes to these auctions on the courthouse steps. Most realize fairly quickly that we were just trying to help forewarn them of what to expect. Unfortunately, others also pay a steep price for not paying attention to these warnings and only focusing on their misguided belief they are going to get a good deal. In no other place in our Southwest Florida real estate market is the old saying "buyer beware" more appropriate than in this situation.

Gulf Coast Associates, Realtors® specializes in upscale Southwest Florida real estate from Bonita Springs to St. Petersburg. Contact us today at 888-617-3674.

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