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American Seized Real Estate
"Last month, even my plumber was bidding," Garbi says. Interest in sheriff's sales has increased over the past few years, especially as books and commercials hype the profitability of buying foreclosed properties, says Chris McBride, the real estate manager for the New Castle County Sheriff's Office. "There's this phenomenon of get-rich-quick," says McBride. "It just isn't the case. Competition is vigorous. ... It's not something you dabble in." The office even gets inquiries from out of state -- from as far away as California. New Castle County Sheriff Michael P. Walsh calls the uninitiated "the myth-followers." "There's so many professionals in here now, you're not going to steal anything," he says. Yet, every second Tuesday of the month, newcomers in search of a deal flock to the ground-floor council chambers in the City/Council Building on North French Street in Wilmington, where the office holds its sales. "The house I wanted is no longer here," complained a first-time participant, who did not want to give his name. He had paid money to do a title search on the property and spent $10 at the door for an updated list on the day of the sale. "I guess I wasted my money," he said. About two-thirds of the homes that appear on the lists at the beginning of each month are pulled before they go up for sale, because at the last minute the homeowner manages to pay off the debt, works out an agreement with the mortgage company or declares bankruptcy. Of the properties that do go up for bid, more than half are bought back by the lending company, which usually tries to recoup its investment so it can re-lend the money to someone else. "The law requires that the bank can't bid any lower than 50 percent of the fair market value to start," says Janet Charlton, an attorney who bids at sheriff sales for a number of banks. For each property, the bank calculates an upset bid -- how much it needs to recoup what is owed plus fees, interest, taxes, and the carrying costs it would have to pay if it chooses to repossess and sell the house. In New Castle County, those fees include a sales tax to the sheriff's office of 4 percent of the sale price, up to $10,000. "That all has to be figured into the bid," says Bob Aulgur, an attorney who represents several mortgage companies and has been working at sheriff's sales for 30 years. "We're not trying to get the property back, we're trying to make sure all those costs are covered." Foreclosures cost the mortgage company $49,000 per property on average, Aulgur said. "They would much rather you pay your debt, but some loans are not saveable," he said. In some cases, the banks choose to write the property off as a loss. The sheriff's office warns bidders of the risks. "These are buyer beware. Do your homework," Don Gouge, the sheriff's office attorney, told the crowd last Tuesday before the sale started. "If this were so lucrative and get-rich-quick, I wouldn't be up here. I'd be out there with all of you buying properties." Still, people buy. Some buy vacant lots when they mean to buy houses. Others bid on what they think is a good deal, not realizing the property has damage, or has outstanding liens against it that will have to be paid. About 85 percent of the time, the house is vacant, but in some cases, people are still living there, and the new owner will have to get a court order to have the tenants evicted. The sheriff's office cannot intervene in the bidding, says Chief Deputy Loretta Forsythe-Walsh. "We don't have a horse in this race." Old-timers say the craze is inflating prices. "It's gone crazy," says Norman Weiner, a real estate investor who bought his first property at a New Castle County Sheriff's sale 50 years ago for $200 and has been coming to the auctions ever since. "Prices are too high. You can't make any money." The competition is making it harder to find worthy properties, says Rebecca Matysiak, who has bought and flipped four properties over the last two years with her husband, Rob. Matysiak, a real estate agent from Smyrna, says she and her husband meticulously research any property they bid on, driving by it several times, talking to neighbors, digging up titles and deeds. She blames television shows like HGTV's "Designed to Sell" and A&E's "Flip This House" for increasing interest in sheriff sales, saying the shows make the process look too easy. "It's not reality," says Matysiak. There are signs the frenzy may have peaked. With the housing inventories rising because of a slow market and credit from lenders tightening up, bidders are turning cautious. Over the past year, banks have had to buy back more properties. Of the sixteen homes attorney Aulgur bid on Tuesday, only one was sold to a third party -- and the bank let that one go at a bargain because it was worth less than what was owed, Aulgur said. Property manager Garbi didn't even go to the August sale. He was too busy fixing the row house on 22nd Street, he said. The water damage was so severe he ended up replacing the roof, the back steps and part of the kitchen ceiling TO FIND OUT MORE ABOUT SHERIFF'S SALES New Castle County Sheriff's Office 1020 King St. Wilmington, DE 19801 395-8450 13 The Green, Room 125 Dover, DE 19901 736-2161 Sussex County Sheriff's Office PO Box 69 No. 9 S. Du Pont Highway Georgetown, DE 19947 855-7830 or discover our secret American Seized Properties
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