It's an almost daily event where monied investors seek profit off of people who have run out of cash. Yet there are few bargains.
"It's very rarely a good day for investment," said Sonia E. Patterson, an associate broker at Regency Homes Realty in Mount Vernon who attended a courthouse auction in October.
Homes financed with little or no money down, evictions, paying off liens and a requirement to pay for an auctioned home within 30 days result in an auction process that shuts out regular people.
"How can you compete with 100 percent financing? You can't bid on a property like that," said Patterson, explaining that a home's outstanding mortgage may be higher than its current market value. Over-financed homes on the auction block are undesirable to investors because they cannot be bought and resold with both a return on investment and a competitive resale price, she said.
There were a few observers among the investors and real estate brokers at foreclosure auctions on Oct. 24 and 25, but buying an auctioned home to resell at a profit is a risky endeavor, some say.
"Unfortunately a lot of people come to these sales that don't understand the foreclosure market and attempt to bid and don't realize that the property either has very little equity or that they failed to come with the proper documents and or earnest money, so the sales don't go forward," said Anthony R. Tirone, a White Plains lawyer who on Oct. 25 auctioned off a Yonkers home at 60 Sherwood Ave. belonging to Paul Cordero.
"The only people who are really making money off these sales are the professionals," Tirone said after the auction.
There's not much help offered at the auction, either.
"People want to ask questions. I'm not here to answer questions. I'm paid by the agents," said Claude Brown, a bank agent who brings the documents for the properties to be auctioned. "This is as if you're buying a used car. You get whatever problems that come with it."
Among the pitfalls of buying a home at auction is that a prospective buyer cannot go in the home. Once a home is purchased, evicted owners, angry over losing the property, could vandalize it.
A foreclosed home can also have liens, judgments or back taxes. Title searches, which cost $450 to $600, generally reveal such debts.
Many auctioned homes are sold to the mortgage lenders, which then turn them over to real estate agents. Sometimes auctioned homes are rebought by their current owners.
During Tirone's auction, Cordero had an associate make a winning bid for the home and put down a 10 percent deposit. Cordero declined to be interviewed about his foreclosure.
Claire Diodato, an associate broker at ERA Insite Realty Services in White Plains, brought an investor client to the Oct. 25 auctions, but the prices were too high for her client.
"She would go up to $250,000 because she thought she could buy it and resell for $350,000," said Diodato, whose client bought nothing.
Tirone said buying and reselling foreclosed homes is not for casual investors.
"The foreclosure market in and of itself requires a great amount of due diligence and effort to understand where it's going and how the properties are sold," Tirone said.
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