A guide to buying a house at auction
This house at 262 E. Shore Dr. in Massapequa will be sold in a bankruptcy auction Aug. 24, 2011 Credit: Handout
Properties up for auction may be one way to make the leap into home ownership, thanks to attractive prices and the ability to put down your paddle when the asking amount exceeds your limit, says Alyson Austin, spokeswoman for CoreLogic, the real estate research firm.
In 2010, there were 1,034 properties sold at auction in Nassau and 2,210 in Suffolk. Homes continue to go into foreclosure, and auctions remain a viable option for prequalified buyers, she says.
Here is a description of different types of auctions and how to find them:
Bankruptcy auctions
WHAT THEY ARE. Usually these are cases of an investor with commercial properties or many condos and houses who has overleveraged himself and is looking to get as much as he can to pay off creditors, says Daniel Krimmer, a real estate attorney and chief counsel for Class Abstracts, a title insurance company in Mineola. The trustee in charge of the assets will create an upset price: That means the bidder can't go lower than a certain price. If they don't get a response, they pull the property back because it didn't meet the minimum bid and it can go back into the regular foreclosure sale process.
WHERE TO FIND THEM. They usually are on bulletin boards in courthouses or in legal notices in newspapers and online. Anyone is eligible to bid, although they often attract experienced buyers.
Estate auctions
WHAT THEY ARE. “This scenario is often sad: An elderly recluse with no immediate relatives or a will dies at home. The neighbors or the mailman get concerned and call the police,“ says Jeffrey DeLuca, the public administrator for Nassau County who oversees estate auctions. “A medical examiner comes in and calls the public administrator. The house is then insured for liability, secured with new locks, cleaned, photographed, appraised and finally marketed for sale.“ A genealogy specialist is assigned to find next of kin as beneficiaries.
WHERE TO FIND THEM. Legal notices in local newspapers. In Nassau County go to: www.nassau countyny.gov/agencies publicadmin/index.html and click on “Upcoming Auctions” for a listing; in Suffolk County, go to suffolkcountyny.gov/departments/Public%20 Administrator.aspx.
Foreclosure auctions
WHAT THEY ARE. These are by far the most common types of auctions these days. “Lost jobs, no pay increases, unaffordable adjustable rates, rising taxes, and mortgages that exceed the current value of a home may all squeeze a homeowner into default,“ Krimmer says. While some banks are trying to extend and modify loans, homes can still go into foreclosure and then to auction and a foreclosure sale, Krimmer says.
WHERE TO FIND THEM. They are listed under legal notices in local newspapers over a five-week period, and then an auction takes place at the courthouse. Other listings can be found with real estate brokers, the Multiple Listing Service of Long Island website (mlsli.com) and with websites such as RealtyTrac (realtytrac.com).
Marketing auctions
WHAT THEY ARE. Sometimes, auctions are used to create interest in a home. “By creating a deadline for a sale, it can generate excitement and competitive bidding on a house and help to capture the highest possible sale price,“ says Enzo Morabito, executive vice president of Prudential Douglas Elliman Real Estate and owner of The Maximum Bid in Westhampton, a company that specializes in these types of auctions. The owner can accept or decline the offer.
WHERE TO FIND THEM. Such auctions are usually advertised in local papers, supermarkets or on the websites of Realtors who specialize in them.
REO auctions
WHAT THEY ARE. REO (or Real Estate Owned) foreclosure auctions involve homes that have completed the foreclosure process, but because there was no buyer, are now owned by the bank, says Erica T. Yitzhak, a Lake Success real estate attorney. “There are also a lot of REOs where the owners deeded the properties back to the bank via a deed in lieu of foreclosure or a voluntary foreclosure,“ she says. Yitzhak adds that REOs are often a good buy because the title is clean: The property tax liens are paid by the bank, and any liens or judgments against prior owners no longer affect the property. Banks usually want to get these properties off their books as quickly as they can.
WHERE TO FIND THEM. Usually the REO department of a bank uses a broker to get its properties on Multiple Listing. Ask your local broker if they have REOs. There are some brokers who specialize in them. You may also find REOs listed on bank websites.
Tax lien auctions
WHAT THEY ARE The failure of homeowners to pay their taxes can result in a tax lien sale and ultimately a foreclosure sale auction — even if they are up-to-date on their mortgage payments or have no mortgage. Although the process differs between Nassau and Suffolk counties, says Bruce J. Bergman, a real estate attorney in Garden City and the author of “Bergman on New York Mortgage Foreclosure,“ the goal is the same: The county hopes that the homeowner will eventually pay off the taxes and not lose their home over a relatively modest amount. Case-in-point: The starting bid of a home valued at $900,000 with a $10,000 tax lien, would only be $10,000, plus interest, plus penalties and other associated costs at the foreclosure auction.
WHERE TO FIND THEM. Published under legal notices in newspapers or on courthouse bulletin boards.
Location. 262 East Shore Dr.
Auction type. Bankruptcy
Date of auction. Aug. 24
Time. 11 a.m.; registration opens 10:30 a.m.
Suggested opening bid. $500,000
Inspections. 4 to 6 p.m. Aug 15 and 22
Descriptions. This 6,497-square-foot home is almost complete. It comes with a private beach and a boat slip in the backyard, as well as two waterfront balconies. There is a grand entrance foyer, a dining room, an eat-in kitchen, a living room, a full bath, a laundry room, a gym, a sauna, a second-floor master suite with a full bath, four additional bedrooms, two additional baths and a two-car garage.
CONTACT Richard B. Maltz, David R. Maltz & Co., Inc., at 516-349-7022
Location. 104 Old Cedar Swamp Rd.
Auction type. REO
Date of auction. To be announced if not sold
Current list price. $800,000
Property description. The 1887 Colonial, boarded up due to fire damage, is on 1.48 acres. There are eight bedrooms, six baths and four fireplaces.
Contact. Coldwell Banker Residential, Melanie Cogan 516-319-1623
Location.
5 Meadowfield Lane
Auction type. REO
Dat of auction. To be announced if not sold
Current list price. $359,000
Description. The raised ranch is on a 86-by-145-foot lot, and has an eat-in kitchen, three bedrooms, two baths, a full basement and a sun porch.
Contact. Gotham REO Realty Inc., Isaac Genosar 718-776-1007
