Friday, January 18, 2013

Wanna-Be Real Estate 'Moguls' Continue Getting Their Heads Handed To Them When Trying To Buy 'Profitable' Foreclosure Steals & Deals Online

In Miami Shores, Florida, The Miami Herald reports:

  • Billy Makedonsky thought he’d found the perfect retirement home for his 75-year-old mother. Better yet, buying it required just a few mouse clicks.

    His only concern about the bank-owned house with the terracotta driveway and barrel-tiled roof — other than the fact he’d never bought a home online before — was this caveat on GoHoming, the site auctioning off the property as is: “Please DO NOT DISTURB the occupant.”

    Turns out he had good reason to be worried.

    For $159,000, what Makedonsky got was a house wrapped up in multiple bankruptcies, foreclosed in protested proceedings, and shrouded by allegations of fraud. The home is also the residence of El Portal’s former mayor, Joyce A. Davis, who said she wasn’t about to leave it in the middle of her comeback campaign.

    “There were signs up all over El Portal: ‘Elect Joyce Davis for Mayor,’ and she was squatting in my home,” marveled Makedonsky, a 41-year-old flight attendant.

    Makedonsky’s tale is just one buyer-beware among many in the digital age, when reams of distressed and bank-owned properties are added daily to online auction sites, making the business of vulturing real estate cheaper and more accessible.

    The flipside: Establishing clear title and control of the home, which some cash buyers have never set foot in, can mean sorting through a thicket of foreclosure filings, fraud allegations, bankruptcies, other mortgages, association liens, creditors and combative tenants.

    People don’t realize there’s a lot more to it than ponying up some money,” said Dennis Donet, a Miami foreclosure defense attorney.
  • While Makedonsky bought his home on a private auction, attorneys say more horror stories come from the clerk’s foreclosure auction in Miami-Dade, a county where there is a backlog of 53,000 foreclosure cases.

    Nearly 100,000 properties have been listed on the clerk’s online auction since it opened three years ago. Last year, an average of 100 properties were sent to auction each day.

    Properties can be pulled off of auction or purchased at the last minute by the distressed home’s owner, so not every property listed was auctioned. But Donet, the foreclosure attorney, said the vast new real estate frontier is attracting a new clientele, many of whom haven’t done the proper research on the properties they’re trying to buy.

    “There are riches for sure,” he said. “But you may be opening up a can of worms that’s very expensive to get out of.”

    Attorney Ferrer Shane said the most common mistake buyers make is not understanding what it is they’re buying. Many clients drop thousands on a home thinking they’re buying a foreclosed mortgage when they’re actually buying an association lien that will be trumped by the lender when the bank finally forecloses.

    That’s what happened to Maria Alonso, who spent $9,100 in May on a 2,600-square-foot home in The Hammocks. The home was at auction because of a $7,482 judgment held by the Panache Homeowners Association over unpaid assessments by the previous owner.

    Alonso, however, thought she’d bought the home outright and after fighting for three months to evict the previous tenants, she leased the home out, according to daughter-in-law Dayana De Latorre. And then they got a notice that their new property was to be auctioned again on Dec. 13, this time due to a judgment held by Wells Fargo.

    De Latorre said her in-laws, who bought the house with settlement money from a personal injury claim, have challenged the sale and have a court date set for Wednesday. But they’re not sure what will happen next.

    “It’s been very confusing. There’s not a lot of help out there,” she said.
For more, see The perils of buying a foreclosed home online (It could go fine. Or the ex-mayor could live in the property and refuse to vacate, as happened to Billy Makedonsky).

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