Foreclosure Auctions – Out of Reach of Common Public

Posted on December 21st, 2007 by saman

Investors are there to make profit out of the houses washed in depressive waves of foreclosure. They want to make money from the people who have no money left. They are here for bargains, in state Supreme Court’s lobby.

Sonia E. Patterson from Mount Vernon who is an associate broker at Regency Homes Realty shares her experience of a courthouse auction, which she attended in October. She said “there is hardly any good day to invest.”

Auction process is really tough for common men and keeps them out of the rich for number of reasons. There are houses which are financed for no down payment or little down payment, houses from eviction process and houses to pay off liens. Added to it, auctioned property is required to pay within short period of 30 days only.

“It is hard to participate in such auctions with 100% financing. How can you bid on a house like that”, told Patterson. She further explains that the outstanding mortgage of the proposed property may be much high than its current value in the market. Investors are not interested in over-financed houses at the auction house, because it is very risky to buy and resale with a reasonable resale price to get back the investment.

A good number of real estate investors and brokers were present on foreclosure auction days of Oct. 24 and 25. Although they say it is risky to buy an auctioned home that can return a profit on resell.

“Unfortunately, many people come at these auctions without proper understanding of foreclosure market. They take chance to bid but don’t look whether the sellers have proper documents or what is the current equity of that property or they failed to come with earnest money. These leads to canceled sales,” said Anthony R. Tirone, a lawyer at
White Plains who auctioned off Paul Cordero’s house at

60 Sherwood Ave, on Oct. 25.

After the auction, Tirone said, “Only the professionals are making big money out of these auctions.”

Among the risks of buying a home at sale is that a winner of the bid, i.e. buyer cannot go in the house. Angry owners who are evicted as the home is purchased, can vandalize it.

Other pitfalls include that a foreclosed home can have back taxes, judgments or liens. Extra $450 to $600 are needed to do title searches, which reveal such issues of debts.

Many auctioned houses are sold to the lending institutions, which finally turns them to the real estate agents. Sometimes current owners rebuy their homes in the auction.

One client of Claire Diodato, an associate broker at White Plains could not buy anything because the prices at the auction on Oct. 25 were too high for. Diodata said, “My client intended to buy up to $250,000, so she can resell it for $350,000, but she could do nothing.”

Only the people who can make profit out of the auctioned home are the professionals, and trading of foreclosed homes is not for common people.