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How to Be a Vulture

Don’t just stand by while other New Yorkers are losing their homes—snap one up for yourself.

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Maybe you’ve read the sad stories about all the adjustable-rate mortgage casualties who are losing their homes, and thought: How terrible! Can I get one for cheap?

The answer is a qualified yes. The past three months have seen a 56 percent spike in foreclosures over late 2006. Most are in Queens, but the current list of delinquents (see next page) includes a small yet surprising number in Manhattan. Yes, you’ll be profiting off someone’s bad luck, but how else can you get a home for a third below market value?

Just don’t expect to find one on a breezy Sunday jaunt with an agent. There are no open houses, no walk-throughs with inspectors. If you purchase at auction, you’ll be up against full-time investors—a scary bunch with years of experience feasting on the carcasses of real-estate roadkill. If you win, you must put down 10 percent immediately, with the rest due 30 days after. All this without even being able to peek inside. That comes later, when backing out is no longer an option and the keys to the front door, and everything behind it—water damage, bodies, a tenant nobody mentioned—are all yours. “It’s like Deal or No Deal; you open that suitcase to see what’s inside,” says Jessica Davis, who teaches foreclosure buying at the Learning Annex. “You take a chance for the thrill of it.”

Still want in? First, some basic jargon. After three missed mortgage payments, a property will go into lis pendens (lawsuit pending), meaning the creditor, usually a bank, has put the owner on notice. (NYForeclosures .com, PropertyShark.com, and RealtyTrac .com list such addresses.) The time from lis pendens to the auction block is up to a year, during which time a foolish homeowner will remain in denial and a smart one will try to sell. The challenge for you is persuading him to do so. “You have to be a salesman,” says PropertyShark founder Matthew Haines. “You say, ‘Look, you’re in trouble. I’ll give X dollars for your house and you give me the deed, and you get to walk away with a little money in your pocket.’ ” (Both sides should hire a lawyer to avoid future accusations of impropriety.)

If, on the other hand, the mortgage remains unpaid, the bank will swoop in, foreclose, and sell the property at auction. (Upcoming sales are listed on the same Websites that supply lis pendens data.) There’s a fair bit of sleuthing required before you bid—interviewing neighbors and doormen, perusing title history (through the city’s database, acris, a836-acris.nyc .gov), checking for violations on the Department of Buildings Website (nyc.gov/html/dob), and finding out how much similar homes are selling for. Experts advise bidding 20 to 30 percent off that price (you have to assume it’s a wreck).

A common mistake is not doing a full accounting of liens, outstanding mortgages, and other debts, which are detailed in a file available at the courthouse three weeks before the sell-off. At a recent Brooklyn hearing, one eager newbie outed himself by bidding $180,000 for a house worth about half a million—except he’d failed to note the $400,000 mortgage he’d also be responsible for. (He later chickened out.) And never get so whipped up that you overbid. “You can’t get emotionally involved,” says Wesley Barney, who’s been buying and selling such homes for seventeen years. “I’ve seen that happen plenty of times, even to me. But there’ll be another sale next week.”


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