A Quick Look into the Metro-Atlanta Foreclosure Market
Take a look at the newspaper, TV, and the Internet. It doesn't take too long to realize that a lot of people are jumping in (head-first) into the foreclosure market. When people ask what business we are in, I tell them that we buy foreclosures-A LOT. To a person, they believe that we buy properties before or after foreclosure. It is often difficult to relate in layman's terms that we actually buy properties at the foreclosure auction. The following article will help clear up the confusion.
The terms "Vultures" and opportunistic are often applied to describe what we do. Frankly, they are spot on descriptions. As a federal judge said at a recent bankruptcy hearing, without this market, lenders would be forced to buy back properties at a rate that would preclude them from remaining in business. In our realm, we clean up the pieces left over after the default. We are not the cause.
As most of you know, if a debtor doesn't pay their mortgage, they are in default and will soon receive a Notice of Default (NOD) from the lender. Obviously, the lender is in business to make money on the loan and not act as a clearinghouse for repossessed properties. To that extent, they will go out of their way to prevent the foreclosure action. Now they are not miracle workers and if the borrower cannot or will not demonstrate a willingness to repay the debt then they are left with little choice but to proceed with foreclosure.
The notice of sale begins to appear in the legal organ of the county seat (read: local newspaper) once a week for the next four weeks prior to auction. Typically (if not always) this is on a Friday. Since the auction is held on the first Tuesday of each month, it is not hard to calculate when the first notice of sale will appear. These things read about as well as food labels and science books. Such is life. Thankfully, the format is relatively standard. Most people wait until a paid service condenses the list into a usable format.
Rain or shine, the auction arrives on the first Tuesday of the month between the hours of 1000-1600. The only exceptions are New Years and the Fourth of July if they happen to fall on that Tuesday. Then it is held the following day. It is chaos, mayhem, and not a lot of excitement. So much for the glamour... By the end of the day the numbers just don't seem to stack up. The following breakdown is by no means scientific, but the numbers are tracked by my company and certainly fall within the correct orders of magnitude.
1. In Cobb County, about 400 properties a month are listed in the notices of sale.
2. Of the 400 roughly 75% will "fall off" the list prior to auction.
3. Of the remaining properties about 25% are attractive to investors. The remaining properties are bought back by the lender (i.e., no one bids).
4. Next month looks the same as the previous month and many on the new list are from previous months that fell off prior to auction.
Whatever the "get-rich-quick" schools for suckers are pushing out, it is anything but. If you don't do your homework (due diligence) prior to auction, you stand a better than average chance of getting taken for a ride-and all of your money. These people are obvious to the experienced investor and typically provide the only real entertainment for the day.
I would encourage every agent to stop by for a peek at the show. It is educational and occasionally interesting, but certainly not for beginners. For would-be investors, please, please consider buying post-foreclosure properties before stepping into the deep end of the investment pool. Sharks abound and you stand to lose everything if you are not prepared.
The process has been around for hundreds of years and based upon Spanish law. It is important to remember that many people are losing their homes on this day due to circumstances often beyond their control. It is equally important to know that the system is there for a reason and that it serves the greater good.
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