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Real Estate Bargains On The Courthouse Steps: The Biggest Foreclosure Auction In Dallas Ever

It was my first venture to a Dallas County foreclosure auction, which takes place the first Tuesday of every month “on the courthouse steps”, as ordered by Texas law. And yesterday’s was billed as the biggest ever, some 6000 commercial and residential properties auctioned off for lack of payment. Honestly, way more fun than the fair. I met fascinating people, saw some familiar faces — Allie Beth Allman, Baxter Brinkmann — and learned a lot. Will definitely go back for more. This is where savvy agents know they can not only pick up great deals for clients but find out what the bottom line really is. If you’ve never been, and you love real estate, this is a must-see show. A few quick observations, then hit the jump.

One, I cannot believe how archaic the process is. A bunch of hot people standing outside the George Allen Courthouse, lawyers in suits  (low wool content, I hope). We could have used chair massages and Slurpee’s, and where’s the potty? At first we went to Lew Sterrett Frank Crowley, I pulled out the Handi-Wipes, but was re-directed to 600 Commerce after passing my handbag through the metal detector. Veterans tell me that folks didn’t like being at Lew Crowley for obvious reasons. So we get to 600 Commerce and like a sidewalk fair, everyone is  standing outside under the overhang, where I stayed remarkably comfortable for a July day in Texas. (Note to Dallas County: exterior ceiling fans.)  A few people did stop and ask if this was a fair or something. It was hot, but could have been worse.  Pity the poor trustee  who was off next to Tarrant County’s auction — it is held on the west-facing courthouse steps, outside, no overhang.

Foreclosure attendees consist of four basic food groups: newbies, like me;  investors (serious), also known as vultures; bank reps — I learned many of the banks buy back their own properties so they can re-sell them; people desperately trying to save their homes. The atmosphere is almost camp-like, since the savvy bring coolers and those fold-able camp chairs — one trustee even had a camp battery pack and fan. Paperwork is kept in rolling file cartons a la the Container Store. The American Dream is in full force — one person’s loss is another’s bargain.  Most folks are dressed casually save for the few dedicated attorneys in suits who stand out like hot, sore thumbs, but at least you can see them as they read off their prepped legal docs — same verbiage, different debtor: “Whereas on August 12, 1999, Michael Jackson, a single man, executed a deed for the sum of $500,000 in Dallas County…”  You cannot hear  very well as the buses, planes and sirens are out-screeching  words, so everyone leans in close, creating a huddle around each trustee. I saw one bid start at $80,000, the home sold for $214,000. (Interesting, the guy waiting to about $150K to jump in.) The bidding on some properties  started at a dollar. One Lakeridge property owned by Bank of America started at $24,650, and I wrote about a four million dollar property out there. Someone cleaned house on a $5 million dollar downtown commercial property they snagged for $3 million. The blood thirst for bargains was thick: I was back at the silent auction table at a charity fund raiser where an aggressive broad planted herself in front of the sign-up for lunch with Nolan Ryan at The Ballpark, or at Filene’s Basement with La Perla fifty cents a pair.

To do this right, you need a mentor, and mine was Virginia Cook’s Kyle Rovinsky, a D Best Realtor, and foreclosure auction vet. We wanted to be “in the pit” by ten a.m. and almost were save for the Lew Sterrett detour. The good folks at KERA were there filming a special on mortgages and foreclosure that runs July 21 –I chatted with the delightful BJ Austin and helped them find “who was in charge.” That was an excellent question, actually, because at the forclosure auction it seems that no one is in charge. You must buy the foreclosure list from Roddy’s Foreclosure Listing Service, Inc. to even know what is for sale,  who the trustee is, although a new company, Lone Star Foreclosures, is coming to cover Hunt and Smith Counties: one person’s poison is another’s paradise. Veterans buy the list days ahead,  (this month’s was about 136 pages long) scrutinize and organize it into the properties of interest. The trustee doesn’t just shout out the street address. They call the legal property description,  lot and block number, so you really have to know what you are looking for.  The Roddy’s people put name tags on the trustees — lawyers who work for the banks or mortgagors — and would occasionally shout out the name of the trustee for all to hear. No megaphones, no microphones, and a few lenders will send out a cameraman to document the process.

As for the people, they ranged from the pros working for real estate investment companies to individuals, like the woman and her family who have been buying foreclosed properties for 30 years. She was the one out-bid by a man on an east Dallas property she told me was owned by an older Vet who had fallen behind on his payments — she wasn’t sure what she would have done with the home had she bought it, but she was out-bid so the issue was moot. Though the banks will start bidding at a dollar, they will not let the property out the door at that price. Once the bidding starts, a bank rep will bid it up. You can pick up some real dogs if you don’t know what you are doing — these properties, one veteran told me, sell “as is” and unless you’ve gotten title work you could turn around and have to pay out thousands in unpaid liens, property taxes, not to mention repairs. That’s why you really need the list early  and need to research the properties.  Also, many homes on the list never make it to the auction, like 3616 Beverly. People make midnight deals — even 9:00 a.m. deals — with the lenders to save their home. I was told of a local home builder who has been “saving” his properties the night before every auction now for six months. Still, one expert told me that a smart buyer can pick up a home for 30% less — he strongly suggests that if you have your eye on a property, go ahead and pay for the title work prior to the auction.

I met one young eager investor who started buying buying foreclosures one year ago — 50 units. He put in about $15,000 in repairs and sold for a profit. But this is such a depressing market, I said. Not so, he said, this is when you make money, when the market is down. Quit listening to the media. But what, I asked, what if it NEVER comes back, at least not for a very long time? Doesn’t matter, he said, as long as you buy it right. There is this thing called seller financing.

Real estate, he said, is very much like poker: matters not the cards you are dealt, it matters how you play the game.