Wading into the forbidding world of foreclosures

At 2 p.m. most weekdays, up to three dozen people file into the jury auditorium at the George E. Edgecomb Courthouse in downtown Tampa.

They are not hoping to get picked for a juicy criminal trial or to avoid a boring civil case.

The group is here for a home foreclosure auction. Some are lawyers or representatives of banks that hold defaulted loans. Many are investors looking to snap up houses they hope to flip for profit.

It is not an environment for the faint of heart or the casual buyer.

"They (casual buyers) don't last long," said Robert Koschler, a 10-year veteran of buying foreclosed property. "It's a place where you've got to do your homework."

Potential buyers must make their bids "clearly, loudly and conspicuously," announce the court clerks, who refer to property by docket numbers rather than street addresses or description. There's no "3-2 with big back yard and room to grow" here.

Tips from the pros

Banks are required by state law to reclaim foreclosed property, and their representatives often do so for as little as $100, with little to no competition.

On other properties, an initial offering can climb quickly, with potential buyers bidding in increments that range from $1 to $1,000, or more. It's a gamble as the price approaches the break-even point for investors. Will they be able to get the property and still make a profit after repairs?

Properties also can get yanked from the auction list at the last minute because of negotiations between the lender, the homeowner and the courts.

And it all happens at a head-spinning pace.

Investors and real estate sales professionals say people looking for deals on foreclosed property should understand some key points before trying to buy. First, there is a difference between property in the legal foreclosure process at the courthouse and property that has been foreclosed and is owned by lenders.

Dealing with banks "is almost like you were buying from an average seller. It's a much cleaner transaction," said Mark McEntire of Century 21 Real Estate Champions in Madeira Beach.

Hidden or outstanding tax and title snags on property that hasn't cleared foreclosure can delay a purchase for months, inflating the cost of the deal by tens of thousands of dollars. Not to mention adding headaches.

"That's often the biggest hit that many of my customers take," said Tamra Wondrow, publisher of Foreclosure/Disclosure Weekly, a tip sheet used by courthouse regulars. Subscriptions for the print edition range from $40 for one issue to $1,078 a year, and slightly less for an Internet version of the Hillsborough County service.

Wondrow said she has added two or three subscribers a week who want to buy a foreclosed house for their personal use. Most of her customers are people like Koschler and members of investor groups who pool their money to buy and sell dozens of houses at a time.

Dan Bacon of Keller-Williams Realty Gulf Coast just started a free online listing for south Pinellas County.

"There was really no easy way for someone to get information on foreclosures, or something tailored to them," he said. The foreclosed properties compiled at StPeteFreeHomeInfo.com have all cleared the courts.

Numerous other Web sites offer foreclosure listings by ZIP code and other parameters; many offer "free trial" enticements. Be sure to understand what you are agreeing to before signing up, and remember that all such lists can be subject to human error or last-minute changes.

Doing your homework

Even if you find a property in a neighborhood you like, you'll still need to consider the condition of the home before you buy.

Many foreclosed homes have been stripped of appliances and other amenities that can cost tens of thousands of dollars to replace or repair.

Making things worse: Vacant houses that are tied up in the foreclosure process usually are not available for inspection, leading some potential buyers to take extraordinary measures to get a look.

In other words, they break in, McEntire and Wondrow said.

Buying a home that already has cleared the courts is a much easier and safer process, though likely more expensive.

"Although bank-owned properties are sold 'as is,' buyers are still entitled to their due diligence and can have bank-owned properties inspected for any repairs that may be needed, pests, opened permits, etc.," McEntire said. "All bank-owned properties are vacant, allowing easier access to the property for preview and inspections."

Researching foreclosed properties can take days, from time spent online and at the courthouse to checking out the home. Even a drive-by inspection takes time.

"Time is money," Wondrow said. "People realize they spend all day at the courthouse and they've only looked at six properties. And you have to do your homework over and above what I've done."

Banks frequently produce lists of foreclosed property, but may hold back on some inventory.

Other options

Just keep checking — and be ready to move fast. Foreclosure bids in Hillsborough require a 5 percent deposit the day of the auction with the balance due the next day. The court holds the title for another 10 days, which is the last opportunity for the original homeowner or bank to appeal the transaction.

After that time, "in most cases, financing (for bank-owned property) is no different than the financing for traditional transactions," McEntire said. Properties that have questions about title are more complicated.

Lorraine Ismark, McEntire's colleague at Century 21, said people are more aware of the record number of foreclosures on the market, but they often sour on the idea of buying such property once they get a look.

"In a lot of cases, they don't like what they see and start to look at short sales or a house that has been on the market for a long time," she said.

A short sale is a pre-foreclosure process in which the bank agrees to allow a house to be sold for less than the outstanding mortgage. It can take months, Ismark warned, and there's no guarantee the lender will agree to the deal in the end.

All of which may make dealing directly with the seller of a house that's been on the market for months much more appealing.

Mark Holan is a freelance writer based in Tampa. He can be reached at newsmark@hotmail.com.

if you go

Courthouse foreclosure auctions

Hillsborough

Foreclosure auctions are at 2 p.m. most weekdays on the second floor of the George E. Edgecomb Courthouse, 808 E Twiggs St., Tampa. Records are available in Room 530. A guide for searching records online is available at www.hillsclerk.com; type "view mortgage foreclosures" in the search prompt.

Pinellas

Foreclosure auctions are at 11 a.m. weekdays in the main lobby of the Pinellas County Courthouse, 315 Court St., Clearwater, and at the west entrance of the Pinellas County Judicial Building, 545 First Ave. N, St. Petersburg. Records are available in Room 170 of the Pinellas County Courthouse. Find information online at clerk.co.pinellas.fl.us; scroll down to "Mortgage Foreclosure Sales" at left.

Pasco

Foreclosure auctions are at 11 a.m. Tuesdays, Wednesdays or Thursdays at the Pasco County Courthouse in Dade City and at the West Pasco Judicial Building in New Port Richey. For more information go to www.pascoclerk.com/public-courts-foreclosures.asp.

Note: Auctions are subject to last-minute cancellation or change of location, and individual properties can be removed from the auction with little advance notice.

Wading into the forbidding world of foreclosures 07/03/09 [Last modified: Friday, July 3, 2009 5:30am]

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