Every cloud has a silver lining and in Collin County investors have been making a killing on the foreclosure property auctions that have been on the rise for the past twelve months. The money is mostly being made by real estate investors but in theory, the benefits should be being transferred to the house buyer – that is if anyone can afford a mortgage.
Figures released from the Foreclosure Listing Service (FLS), based in Addison say that the bidders at 2006 auctions were paying 73 cents on the dollar. Deals went better in 2007, creeping down to 66 cents and last year’s average was right down to 59 cents.
Third party purchases were actually down last year at 884 compared to 1,044 the previous year for the D-FW area, this is a drop of 15 percent. With the economic conditions worsening there have been fewer purchases according to FLS.
With more properties coming on to the foreclosure listings, the prediction is for the number of third party purchases to go up significantly over the next few months. Texas has one of the shortest defaulter grace periods in the country, with lenders able to start foreclosure proceedings just 21 days after the notice is given – in many other States, the normal timeline is 45 days. The Attorney General is currently working on extending the time in Texas.
As for property values well the average assessed property price at auction was set at $206,098 with the average bid at around $137,735. This is a good deal above the D-FW area whose bids were much lower at $99,254.
There is a warning for those not too experienced at this process; many of the buyers are professional retail real estate veterans and not private buyers looking to make a quick buck. A substantial number of the properties available for auction are bought unseen and in poor condition requiring many thousands of dollars to make them inhabitable. For the larger real estate agents they have good deals with local builders as they give them a lot of work; for a private buyer, it could prove costly when you actually get to see what you have bought.
Some disenfranchised homeowners who have been thrown out of their homes have completely stripped them bare, right down to the fixtures, fittings and floorboards, so beware. One thing is fairly certain in this game though, the number of foreclosures is still rising, and so the number of properties at the auctions is increasing too; there will be more bargains, but will there be the third party buyers for them?
