Brian Lee
IC Indy Guru
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« on: September 29, 2007, 11:55:57 AM » |
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Last year (2006) saw a spike in the number of foreclosures around the Indianapolis area with a record high of 8,874 properties sold at the sheriff sale. That record is expected to be broken this year as the number of properties sold at the sheriff sale to date (September 2007) is at 6,700. The September sale included a total of 721 properties. Don’t start licking your chops yet investors. More than half of those properties were withdrawn by the lenders or homeowners due to a settlement or the past due balances were paid. Even more were taken out of the sale due to the foreclosure filings by the homeowners. Once a foreclosure is filed by the homeowner, the property is immediately pulled from the sheriff sale. After all was said and done, only 21 properties were left for the picking by investors. By count, approximately 60 investors were present to bid on those properties. Out of the 21 available properties, most were bought back by the foreclosing lender. Those lenders send out a representative to bid up the property in an effort to protect their interest in the property and recoup some of their losses. According to the clerk, only 3.5 percent of the properties put into the sheriff sale were actually bought by investors. It is estimated that in past years, 8 percent of all properties in the sheriff sale were bought by investors. The drop is attributed to those lenders protecting their investment. Typically those lenders are more willing to pay a higher price as they have insurance protection through the PMI (private mortgage insurance) companies.
Don’t get discouraged by this news! The properties that are bought by the lenders are then re-listed by a Broad Listing Broker. These local real estate agents list the properties for sale and are available to us. That is where I find a lot of our Investor’s Choice deals. Through my years of writing appraisals, I have worked with several of those BLB’s and have good relationships with them. In fact, I write appraisal reports for those brokers to help price the bank owned/REO properties. There are a few positives from that deal. First, we are not competing with 60 investors and lender representatives at a sheriff sale to buy the property. Secondly, we receive a special warranty deed from the lender when we purchase directly from them. When we purchase a property at a sheriff sale, we only receive a sheriff’s deed which does not provide a lot of protection from other lien holders trying to collect money. Lastly, I am helping to price those homes and have a “leg up” on the public about those properties. Take advantage of the resources that you have available. Not many investors have the wide range of benefits that are accessible to you, especially at the price you pay.
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