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Buying a foreclosure getting easier

by David Chapman

With available tax incentives, home values declining and inventory records at recent all-time highs, many prospective homebuyers are finding the common National Association of Realtors mantra of “It’s a Great Time to Buy” to be true.

There’s another group of residential and commercial properties that are also getting a lot of looks. But this particular market is one that often has a negative stigma attached to it due to the economic conditions in which they became available for the right price.

It’s the foreclosure market.

In Duval County, how one goes about attempting to secure one of these potential deals has drastically changed in the past couple years due to both technology and the economic factors that spawned the problem.

As of November 2008, the long held saying of buying a property “on the courthouse steps” was transformed into simply “online” as the Clerk of Courts launched a Real Auction Web site dedicated to maintaining the records and sales for foreclosures of property.

It’s this Web site where interested parties should begin their quest, said Justin Portlock, special assistant to the Clerk of the Circuit Court, by registering a user name and password.

With or without those, interested parties can preview a three-month calendar of foreclosed homes and their respective auction dates, complete with the auction type, case number, final judgment amount, the parcel’s identification number, address, assessed value and the plaintiff’s (often the bank’s) maximum bid.

With the online change, Portlock has said it’s comparable to another popular auction service.

“It’s almost like eBay now,” he said.

Before the auction begins, though, interested parties have a little more legwork to do — or should.

Bidders must create an account and place 5 percent of whatever their maximum bid intends to be by 11 a.m. the day of the auction. Without the percentage, bids can’t be placed, as there is no delay in the process for latecomers.

Auctions don’t last days like they would in other venues, but instead take just minutes. Two minutes, that is, with the clock resetting to 30 seconds if a bid is placed within 10 seconds of the auction closing to prevent “sniping.” The resetting prevents someone from swooping in at the last possible moment to place a bid without giving other parties time to counter.

Winning bidders are then alerted via e-mail of their success and sent a certificate of sale to take to their bank. Along with the notice, the remaining portion of the bid — all 95 percent — is due by 4 p.m. that day.

“Many times people work with their banks ahead of time, talk to them and open up lines of credit for potential mortgages,” said Portlock.

Banks that still deal in home mortgages are working with customers on purchases, but the parameters of assistance have changed with the economy.

“It’s definitely changed from the times when real estate was booming from 2004–06,” said Matt Maynor, vice president and manager of asset qualities for First Guaranty Bank, “but we still work extensively with our customers.”

When real estate was booming, one could finance for a figure in the single digits. Now, those looking at homebuying in areas like foreclosures should be prepared to put down an average of around 25 percent of the home value, he said.

“People just have to put more money down now,” he said.

While deals can be had, he said, commercial properties — ones that could result in income — are beating out residential properties on the foreclosure market.

Still, the auctions, or deed sales, are generally user friendly and make for a nice initial foray into the market.

“If you’re beginning to look at foreclosures, a deed sale is an excellent way to begin,” said Maynor.

Also, individuals aren’t always the only ones bidding on a property. The bank that foreclosed upon the home often gets in the process, too, bidding up to the value of the original loan plus any Clerk of Courts fees (usually 1.5 percent of the first $300,000) in an effort to not lose money. If the bank ends up with the winning bid, it becomes a real estate owned property (often referred to as a REO) and ends up listing like a normal property on the market.

Maynor and Portlock both heavily advise parties entering into the world of auctions to do their homework once a property is found. Title searches, home drivebys, property history, the style of mortgage, a potential viewing inside all are vital, as homes come as-is.

Following the winning bid and payment, there is a window of 10 business days for defendants — other bidders, the bank or other interested parties — to object to the sale.

“Anyone can object,” said Portlock. “I always tell people not to do anything to the house for the first 10 days, because you never know.”

In the past, winning bidders themselves have objected to the sale after finding a flaw in the property. Now, said Portlock, judges are not allowing as much leeway and throwing out such protests due to lack of due diligence.

While potential deals on homes and properties are out there for those willing to take the time to take that due diligence, one piece of advice in particular sticks out.

Do your research.

By the numbers

The following are the top foreclosure states in the country for the first half of 2009. The figures are total foreclosures filed, according to RealtyTrac.com.

1. California — 391,611

2. Florida — 269,064

3. Arizona — 89,799

4. Illinois — 68,932

5. Nevada — 68,708

6. Michigan — 60,786

7. Ohio — 58,937

8. Georgia — 56,391

9. Texas — 49,144

10. Virginia — 28,368

Hyde nominates foreclosure task force

City Council member Kevin Hyde

City Council member Kevin Hyde took on the foreclosure problem in earnest last November when he held a series of meetings with local attorneys, bankers, mortgage brokers and City leaders in an effort to determine the depth of the problem.

One of the results of those meetings was the formation of the Jacksonville Foreclosure Task Force. The nine-member task force represents a cross-section of Jacksonville residents and business leaders. Once approved by the Council Rules Committee and the full Council, the committee will begin its work. Their terms all expire Dec. 31, 2011.

The following are Hyde’s nominees:

• Michael Boylan

• Carrie Davis

• Michael Figgins

• John Finotti

• John Hirabayashi

• Dawn Lockhart

• Ruth Owen

• Chip Parker

• Raymond Rodriguez

Last week, Hyde was in California, but he did respond via e-mail to several questions related to the task force.

What was the logic behind those who are up for appointment to the task force?

All appointees have a role in working on the foreclosure issue and many participated in the two recently held City foreclosure summits.

Who will serve as chair and why?

Michael Boylan, because WJCT is taking a lead in addressing our local foreclosure crisis and Michael does not work for any industry involved in a specific part of the foreclosure process so he brings a more global perspective to the issue.

Ideally, when will the group start meeting?

Mid-September.

Will they have to operate under the State Sunshine Laws?

Yes, they will be subject to the Sunshine Law and they will be required to take ethics training that explains the application of that law to their role as board appointees.

What is the task force’s primary objective?

The Board’s primary objectives are 1) to look at best practices across the country; 2) to further recommend measures that will reduce our local foreclosure rate; and 3) to keep track of the local foreclosure rate and how well their recommended, responsive initiatives are working.

What will be your role?

My role is to receive and advance recommendations from the task force.

dchapman@baileypub.com

356-2466

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