by Bradley Parsons
The housing market may be cooling nationally, but inside the Duval County Courthouse the foreclosure market is booming.
Rising interest rates and an ample supply of new homes might mean that “For Sale” signs are lingering longer in front yards. But the foreclosed property auctions inside the Courthouse attract crowds of buyers. Tuesday’s auction saw eight properties sell in less than an hour.
That number doesn’t represent a particularly busy day for the auctions, held daily at 11 a.m. at the Courthouse. The auctions typically move from 10-30 properties a day, according to the Clerk of the Circuit and County Court’s office, which runs the proceedings.
Staff at the Clerk’s office said the number of foreclosed properties has been on the rise this year. Several buyers at the auction attributed the increase to the popularity of Adjustable Rate Mortgages.
As interest rates climb, those mortgages have become unaffordable for many middle- and low-income homeowners, said April Charney, a consumer attorney for Jacksonville Area Legal Aid.
Charney, who specializes in foreclosure defense, keeps her clients out of the auctions by working ahead of time to settle their debts. But the auctions are becoming a frequent finish for too many Duval County homeowners, she said.
“Particularly in poor neighborhoods, we’re drowning in foreclosures,” she said.
It’s not just on the supply side that the auctions are growing. Many more buyers now crowd the Courthouse’s atrium to bid on the properties. The chance to pick up cheap chunks of Florida property draws a diverse crowd. Real estate attorneys in three-button suits wage bidding showdowns with Stetson-wearing contractors in jeans and boots. The crowds make it harder to walk away with a bargain, said John Kern, an entrepreneur who bid on his first foreclosed property four years ago.
“I used to come out here and there’d be two or three people out here,” said Kern. “Now you’ve got all these people just bidding up and bidding up.”
Many of those people are lured to the auctions by tales of the quick flip and easy money.
“A lot of people think they’re going to make a lot money,” said Mark Kessler, an attorney bidding on properties for his clients. “Some call them speculators, some people have worse names for them.”
But the properties, even at half the market value, aren’t always sure things. Herb Rinderer, a title examiner who also invests in the properties, said novice bidders sometimes receive an unpleasant surprise with their winning bid.
“If you don’t do title research, you don’t know what you might be getting,” he said. “You could be buying a second mortgage on that property. I did a search for one client and the property had a $77,000 IRS lien attached.”
Title researchers like Rinderer, who promises to get “the dirt on the dirt,” are part of the spin-off business created by the auctions. The auctions don’t just attract buyers, although there are plenty of repeat customers whom the Courthouse guards know by name. The auctions also draw title search firms, contractors and real estate attorneys.
Charney wishes she could get all that manpower involved before the properties end up on foreclosure rolls. Ironically, she thinks many of the properties could be had early at a discount. The foreclosure price often includes fees from lawyers and lenders.
“There’s a lot of smart people in this room,” she said. “It’s too bad the living they make comes along with a heavy human toll and a toll on the community.”
Charney noted that JALA research shows a correlation among foreclosure rates and crime rates in a neighborhood.
“Look at the top 10 zip codes for each and you’ll see a lot of overlap,” she said.
But several buyers interviewed said they have nothing to do with putting homeowners into foreclosure. They enter the process after the County’s courts have made that decision.
Kern, who buys mostly in poor neighborhoods, said he’s often welcomed into the community.
“When I get in there, the grass is usually two feet tall, the house is a mess,” said Kern. “We put money into those houses and into those neighborhoods. We get the house in shape and move a family in there.”
Gathered along with the veteran buyers Tuesday, Amy Solomon was attending her first auction. She wasn’t looking for a bargain, she was hoping to outbid a developer for her house, the only lot left in an otherwise bought-and-sold Sandler Road trailer park.
Twenty minutes before the auction, Solomon’s attorney gave her good news: her house had been removed from the auction list, allowing her to go ahead with a planned sale.
“I’ve got a willing-and-able buyer, I’ve just been tied up in legal red tape,” she said. “I’m thrilled to sell. I just don’t want to lose my house for nothing.”