Hard Bargains

Illustration by Jason Lee

You might expect that the second-home market is rich enough to be immune to foreclosures, but you would be wrong. As has been widely reported, the number of repos is small but rising on the East End, and quite a few properties upstate, on the Jersey shore, and on the North Fork are slated for auction. As it turns out, “people are more willing to walk away from them” than from primary homes, says Rick Sharga of RealtyTrac.com, which lists foreclosures.

If you’re on solid fiscal ground, a bank auction can be an opportunity—but it’s not one for the risk-averse. (Or if you’re the conscience-stricken type: too many sad stories.) If you’re bidding at auction, you can’t tour the house. Your best info is going to come from the foreclosure lists and reports available from PropertyShark.com, RealtyTrac, and Nyforeclosures.com. PropertyShark CEO Bill Staniford also recommends drive-bys, chatting up neighbors, and hiring local brokers or lawyers to make sure there are no hidden surprises like extra liens.

Come auction day, you’ll need a check in hand for 10 percent of your top bid. Usually, the opening bid is the bank’s “upset price”—the minimum amount it’ll accept, usually about the amount owed on the mortgage plus any fees or penalties. Buyers have 30 days to pay the balance. Prepare for competition: The pros are always there, and “they have a tendency to bid up new people just to get you out of their hair,” says Sharga.

Which may be why it’s better to try to cut a deal beforehand, says Jessica Davis of Nyforeclosures.com. Try writing or calling the owner when a home is in lis pendens, meaning proceedings have begun but the property hasn’t been taken yet. With the owner’s permission, you or your broker or lawyer can also talk to the bank. “It usually takes three or four times of contact” before the homeowner responds, says Davis. If that doesn’t work, the auctions listed below—all for real properties typical of each area—may be a way to spend less money for more house than you’d find anywhere else.

The Jersey Shore
Ocean County, which covers much of the shore, has 2,013 properties in pre-foreclosure, and 137 scheduled for imminent auction, per RealtyTrac.

The house: A five-bedroom, five-bath Victorian.
What’s owed: $1.424 million
Auction date: July 2 at 1 p.m., at the town’s Old Historic Courthouse.
Is it a great deal? This property was a designer show house last year, which means it’s freshly renovated. A local broker’s trying to sell it for $2.399 million; if it goes for near the lien price, someone will get a pretty great bargain.

The house: A 1,760-square-foot circa-1930 bi-level, half a block from the promenade.
What’s owed: $246,193 plus “unspecified taxes and assessments.”
Auction date: July 1 at 2 p.m., at the sheriff’s office in Toms River.
Is it a great deal? A comparably sized house built in the same era sold last August for $620,000. But those “unspecified” charges could be killers.

Upstate New York
There are 122 properties in distress in Ulster County—which includes Woodstock and Kingston—according to Nyforeclosures.com.

The house: A three-bedroom, 21/2-bath two-family built in 1978.
What’s owed: $300,828
Auction date: July 11 at 9 a.m., on the front steps of the Columbia County Courthouse in Hudson.
Is it a great deal? The owner bought the house for $150,000 in 2005, suggesting that if you get it for $300,000, it’ll be only a so-so bargain. In cases like this, check comps or ask a broker if it’s worth it.

The house: A 1,752-square-foot eighties raised ranch on one acre.
What’s owed: $242,840 plus interest and costs.
Auction date: July 10 at 10 a.m., at the Ulster County Courthouse in Kingston.
Is it a great deal? Depends on condition: Smaller, similar houses are currently listed for about $270,000. But any other outstanding loans could tip the balance. Best to do a title search first.

Long Beach, the North Fork, and the Hamptons
Only moderately affected. “It’s not a tsunami of foreclosures like Miami,” says Davis, especially in tonier parts of the East End. There are, for instance, no properties being gaveled off in North Haven, and only one in both Wainscott and Sagaponack, according to LIprofiles.com.

The house: A four-bedroom, three-bath contemporary on the banks of Long Island Sound.
What’s owed: $650,000
Auction date: Nothing’s set; the bank just started foreclosure proceedings in May.
Is it a great deal? Because it’s in lis pendens, the owner will probably make a deal. In fact, the house is on the market for $1.85 million, and it’s been nicely renovated, with bamboo floors and a new gazebo.

The house: A 3,446-square-foot two-story contemporary with four bedrooms and three baths
What’s owed: $330,596
Auction date: June 25 at 9 a.m., on the front steps of the Southampton Town Hall.
Is it a great deal? If nothing else is owed and it’s in good shape, there’ll be competition for this one. According to PropertyShark, similar sales put the value of this house at $1.44 million.

The house: An 1,158-square-foot twenties bungalow a few blocks from the ocean.
What’s owed: $380,000
Auction date: Still pending.
Is it a great deal? Its location can’t be beat, but the house has only one bathroom and may need some TLC. A similar but slightly bigger house a few blocks away sold last year for $565,000.

Hard Bargains