Here’s an interesting article on the Travis County foreclosure auction. I attended the auction yesterday, and it did seem there was much more tire kicking than actual buying. If you’d like more information on properties for the next auction, email us at: btaylor@taylorrealestateaustin.com or ltaylor@taylorrealestateaustin.com
HOME FORECLOSURES
Business is slow, even at the foreclosure auction
By Shonda Novak, M.B. Taboada
AMERICAN-STATESMAN STAFF
Wednesday, December 03, 2008
There were a lot of lookers but few buyers at the year’s final foreclosure auction.
Investors who buy foreclosed properties must pay cash upfront — and these days, cash is short, even for them.
Still, about 100 people stood in a cold wind outside the Travis County courthouse on Tuesday morning to look for good deals amid scores of homes being auctioned because their owners could not keep up with the mortgage payments.
With a pocket full of cashier’s checks, real estate investor David Buttross II said he came prepared to spend up to $1 million. Buttross, a regular at the auctions, has bought 100 foreclosed houses this year but said he has slowed down because it’s harder to borrow money in the tight credit markets.
“I’m not showing up swinging as big of a bat these days,” he said.
He bought two houses Tuesday, paying $99,400 for one appraised on the tax rolls at $200,000, and $56,000 for the other, which he said is worth $120,000.
This has been a harsh year for foreclosures in the Austin area, with postings up 27 percent from 2007, according to Foreclosure Listing Service Inc. A slowing job market and a troubled economy are making it harder for people to hold on to their homes.
Some experts say the problem has peaked in Central Texas, while forecasts by research firm CoreLogic are for defaults to possibly double nationwide by the end of next year as the recession deepens and more people lose their jobs.
In past years, the auctions, held on the first Tuesday of every month, have attracted bigger crowds and more active bidding, with investors looking for homes they could repair and flip at a profit.
But lately, it seems, “nobody has cash, and cash is king,” said Brent Williamson, an Austin real estate broker who was prospecting for property on behalf of a Malaysian family looking to invest in U.S. foreclosures.
Williamson also said investors are cautious because of the uncertain housing market.
“We’re kicking the tires. We don’t know if the national housing market is going to continue to go down, so we’re watching the trends,” he said.
The investors, dressed in jeans and baseball caps, clustered in groups around agents for the lenders, who rattled off the long lists of properties up for bid. With several auctions going at once, it was hard to hear.
One investor called it “controlled chaos.”
Most of the properties are modest homes valued at less than $200,000. This month, the list included a number of more expensive properties, including one in the gated Costa Bella community on Lake Travis. The house, appraised on the tax rolls for $2.8 million, went back to the lender.
Many properties posted for foreclosure never make it to the auction; the lender either works something out with the homeowner at the last minute or decides to hold on to the house for resale.
In Travis County, only 124 of the 471 properties posted were put up for auction Tuesday, much fewer than usual.
That’s because of a recent moratorium halting foreclosures on Fannie Mae and Freddie Mac loans until Jan. 9.
Of those 124 homes, investors bought 15; the rest went back to the lenders.
In Hays County’s auction, only one property of 71 sold to an investor; the others went back to the bank. In Williamson County’s auction, only two sold to investors.
“It was a very slow day,” said Peter Sajovich, a real estate broker who buys investment property for clients.
Sajovich said banks tend to hold off on foreclosures during the holidays.
“Around Christmastime, they don’t want to be evicting people,” he said.
Steve Glasgow, a partner in RAM Investments, said the situation is nothing like the real estate bust of the late 1980s and early ’90s, when hundreds of people in Austin lost their houses.
If banks “jump in and help people out” — by holding off on resetting adjustable-rate mortgages to higher rates, for example — “then maybe we have plateaued. If they don’t, there’s more misery on the way,” he said.
“I think people are still losing jobs, and if more people lose their jobs, more people are going to lose their homes. I don’t expect (foreclosures) to top out until the end of the first quarter of next year,” he said.
Glasgow said that buying at a foreclosure auction might be a “shrewd way sometimes to buy a property, but you are dealing in misery a lot of time. It’s sad.”
mtaboada@statesman.com, 912-2942;
snovak@statesman.com, 445-3856
