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Foreclosure auctions offer bargain opportunities

Sunday, August 5, 2001

By LAURA LAYDEN, lllayden@naplesnews.com

Snap your fingers and that's how fast a home in Golden Gate went in a foreclosure sale on Wednesday.

Standing in the atrium at the Collier County Courthouse, Dawn Gibson, a deputy clerk for the county, opened bids just after 11 a.m. A representative for the mortgage company stepped forward. He offered just $100. Onlookers didn't pipe in any another offer.

"I have an opening bid of $100 from the plaintiff," Gibson said.

"Sold to the plaintiff."

This scene plays out over and over again at the county courthouse — and at other courthouses across the country. A homeowner has fallen behind on their mortgage payments, and the lending institution forces a sale to try to recover its money.

In Collier County alone, there's an average of 200 to 300 foreclosures a year. Available properties are advertised in the local newspaper. They can also be found on a clipboard on the sixth floor of the courthouse, or on the Internet at http://www.clerk.collier.fl.us/.

In Collier, the sales are always held at 11 a.m. on the first floor of the courthouse. They can be on any day of the week, except Friday.

"Right now it is kind of slowing down," Gibson said. "I don't have a whole lot. I probably have more in season."

Nationwide, foreclosures have leveled off, but they're soon expected to increase as the economy continues to soften, causing more corporate belt tightening and layoffs, said Todd Beitler, president of the Real Estate Library, a foreclosure service provider in Boca Raton.

"Payments are getting later and later and later," he said.

"Therefore, foreclosures should start to rise again."

In Florida, a lender must file a suit in court to set a foreclosure in motion, and the judge must find that the borrower is in default. Once that happens, a borrower usually has a few months to come up with the money that's owed.

At foreclosures sales, property goes to the highest bidder. In Collier County, the buyer must put up a deposit of 5 percent of the sale price at the time of the sale, and final payment is due at 10:30 a.m. the following day.

If payment is not received on time, the clerk's office will readvertise the sale and start over.

Usually the sales are a quiet affair. Once and a while they attract a lot of attention.

Recently, Maggie Loyd, a 79-year-old River Park resident, saw her home of 33 years sold at a foreclosure auction, and her story caught the media's eye and the hearts of her neighbors. She lost her house for reasons she didn't understand.

When her home was sold, Loyd owed $50,000 on it, though she'd been making payments for three decades.

Loyd tries to live on about $600 a month in Social Security payments. Many years ago she was forced to take out a second loan when the roof caved in and she found that she could no longer make her $540-a-month payments on time.

"Sometimes I do have an interesting one and it ends up on TV," Gibson said. "They keep me on my toes. There's always something new with foreclosures. Each case can be different."

	AT A GLANCE
	In Collier County alone, there's an average of 200 to 300 foreclosures a year. Available properties are advertised in the local newspaper. They can also be found on a clipboard on the sixth floor of the courthouse, or on the Internet at http://www.clerk.collier.fl.us/.

Gibson, who handles all of the foreclosure sales in Collier County, didn't seek out the job.

She fell into it about 3-1/2 years ago.

"I really wasn't interested in them," she said. "They just kind of started teaching me because they knew someone was leaving.

They just grew on me. Now, I kind of like them. They are just interesting."

Investors appear regularly at the courthouse for the auctions.

One of them is Marc Shapiro, a Naples personal injury attorney, who has made a second business out of buying foreclosed property.

When Loyd's home went on the selling block, it was Shapiro who made the highest bid. He got the home for $51,500. After hearing the woman's sad story, Shapiro worked with community leaders to try to get the home back into her hands.

More than $40,000 has been raised to buy back the home.

Shapiro is allowing Loyd to rent the home until the rest of the money is found to pay him back.

He hopes to break even on the deal.

"You have to pay all cash at the foreclosure," he said. "But I said, given the situation, I could forego the profit I would make.

Right now I'm using some donations, and they are renting it back from me so that I'm not losing interest on the money I used to buy the place."

Typically, Shapiro buys four or five houses a year at foreclosure sales. Recently, he's teamed up with others to create Amber Lou Investments, and he hopes it will enable him to purchase more properties.

While all sorts of properties come up for sale at the courthouse, Shapiro usually sticks with houses.

"I like homes the best that have three bedrooms or more," he said. "That doesn't mean I wouldn't buy a commercial piece of property or a lot. But I would need to get a better deal.

Those are hard to find buyers for."

Sometimes, a house can be resold within a few weeks.

"The only reason I like homes the best is because you can sell those quickly," Shapiro said.

"When you pay all cash for a place sometimes it's good to get out and in quickly."

Shapiro's interest in foreclosures started about eight years ago. He had time to kill between cases and rather than go all the way back to his office he decided to start researching foreclosures.

He started out slow, buying a few homes here and there. Back then, it was easier to make money because there were few others attending the auctions. Now, there's more competition, especially when there's a hot property for sale.

"You can still get a good deal," he said. "But the days of getting a great deal are a lot fewer and far between."

In the past, Shapiro was able to bid $1 more than the bank and ended up with the property.

Now, it's tough to get anything for half of what it's worth.

"You might get something that's under market value, but you are not going to get a steal on the place."

Over the years, Shapiro has seen many folks get excited about the opportunity of making money on foreclosures. But, it's not easy work, and few have the energy to stay with it, he said.

"A lot of people start it, do it for a weeks and drop out," he said. "It's almost a full-time job.

If you devote yourself to it full- time, by the end of the year I think you'll find you did all right; I mean you made a decent living from it."

Shapiro has never lost money on anything he's purchased, but he does his homework.

"Most of them I flip," he said.

"I make a nice supplemental income. I haven't gotten rich off them yet, but by doing three or four a year it definitely supplements my income."

The business of buying foreclosed property can be risky.

Buyers should thoroughly research properties they are interested in, and they should attend several auctions before attempting a bid, Shapiro said.

If a buyer isn't careful, he could end up buying a property that has another mortgage on it, for example. The first mortgage holder could foreclose on the property once it's in the hands of the new owner.

In most cases when property is auctioned off at the courthouse, the lender winds up with the property, Gibson said.

"Probably 80 percent of the time they go back to the bank or other lender," she said.

That's what happened on Wednesday. A representative for Market Street Mortgage Corp. made the only bid of $100.

Shapiro, who was looking on, said many people who didn't know better might have thought they could have got the home for $101, but he knows from experience that the lender would have gone as high as $90,173.60 — the amount owed on the house, including the principal, interest, late charges, taxes and other fees.

Because so much was still owed on the home, Shapiro said it wasn't anything he would have been interested in bidding on.

The four-bedroom house, which was owned by Dieuseul Vilsaint, has 1,644 square feet under air. It was built in 1979, and sold in 1983 for $52,000.

In 1998, the house sold for $83,000.

Ray Snow, a real estate agent with Independent Brokers Realty, showed up at the sale and looked on as the mortgage company made it's bid. He attends auctions here and there, hoping to pick up a good deal.

Snow looked over the Golden Gate house Tuesday, and it still looked like somebody was in it.

Whenever he's interested in a property he takes a drive by it, and he tries to take a peak inside if possible.

He never wants to go into a sale blindly. "You could go in there and there could be holes in the drywall, no washer or dryer or all the lights might be pulled off the ceiling. People involved in foreclosures can get really angry."

Like Shapiro, Snow didn't think the Golden Gate house was worthy of a bid. Neither did Ted Luo, an investor who was sitting beside him, also looking on at the auction.

Luo, who recently sold a restaurant he had owned for 15 years, now hopes to make his living from turning property around for a profit. He's done it before, but he's now devoting more time to it.

There is money to be had in buying foreclosed property if you're lucky, patient and you do your legwork, Luo said.

Six years ago, he purchased a two-unit apartment from a bank, and put up only $4,000. He wound up making that money back on the rent he charged for the units before he sold them, and he pocketed another $80,000 when he sold them.

Snow said if you know where to look for foreclosed property, and you choose the right properties you can make a lot of money. A few years ago, he bought a condominium for $111,000 from the federal government, and sold it for $129,000.

"You can make a windfall profit in a matter of days," he said. "It's a real big high when you do it."

Also in this week's Real Estate section:
Centerpiece: Starting from scratch
EXCEL Award winners honored
Model of the week: The Lazio emphasizes outdoor spaces, special places
Real estate briefs
Real estate news in brief: Construction rates, sales rates
Real estate news in brief: Staff appointments, sales leaders
Real estate transactions
Richard White: Only one vote to a customer, please
Under-25 crowd buying homes in growing numbers

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