The Foreclosure Report

An Enormous Amount Of Competition

The Sun Sentinel reports from Florida. "The scene plays out every week in Room 385 of the Broward County Courthouse. 'Case No. 06-19776,' intoned the auctioneer, a foreclosure clerk named Barbara Pendergrass. Near the back, Earl Lawrence leafed through his thick black binder and looked up the property, a small townhouse in Tamarac. His research sheet told the story: Bought for $65,500 in September 2000, a foreclosure judgment for debts totaling $188,000 last December."

"'They borrowed themselves right out of a home,' said Lawrence, a real estate investor who has been coming to the public auctions for 25 years. There were no bids on the Tamarac townhouse Thursday, apart from the minimum $100 that the foreclosing bank made to formally seize the property. The same thing happened with most of the 88 properties up for auction last week."

"Florida has more foreclosures in the pipeline than any other state, 19,144 in February, according to RealtyTrac."

"The real estate market has become so uncertain, and the debts racked up on these properties so high, even the vultures aren't nibbling. 'Would you buy a property for $420,000 if you could only sell it for $400,000?' said Adnan Kabbara of Weston, a developer and contractor who has bought homes at auction for four years."

"Properties that would have attracted a bidding war a year or two ago, when the real estate market was soaring, now stay with the lenders. The banks sell them through major national real estate firms, more frequently at a loss."

"You'd think with more foreclosures, there'd be more opportunities for the opportunists. But the auctions have become ultra-conservative, with only a handful of properties triggering bids."

"When a property does get action, a high-stakes poker game erupts. 'There's an enormous amount of competition,' said Lawrence. 'There are so many people trying to get the few viable properties, they get bid up to the point of razor-thin margins.'"

"On Thursday, one investor almost made a costly mistake. He bid $406,000 for a waterfront mansion in Lighthouse Point. He didn't realize the $402,132 foreclosure judgment was a second mortgage, and that there was also a first mortgage of $938,000 about to foreclose."

"'He thought he was going to get a $1 million home for $400,000,' said Dominic Abreu, attorney for the lender."

"Before the man paid nearly $27,000 in deposits and fees to the court clerk, Abreu asked him if he was aware of the first mortgage. 'His jaw almost hit the ground,' Abreu said."

"The man scurried out before paying, scuttling the deal."

posted by Ben Jones @ 9:57 AM