I’ve never been particularly superstitious and I’ve even owned a lot 13 once upon a time (which I sold for a handy profit!). In fact, I don’t really believe in luck of any type to any significant extent. Still, today’s Mountain Press Newspaper isn’t very charming. In the legal notices section of February 24th’s edition, there were THIRTEEN unrelated Substitute Trustee notices which for those who don’t know are formal notices of foreclosure. By Tennessee law, a lender must publish in a newspaper of general circulation a statement indicating their intent to foreclose. In fact, they actually must run the notice 3 times one week apart and unless other notice has been given all three of these are supposed to be published at least 30 days prior to the actual proposed completion of the foreclosure. Because each foreclosure sale must be advertised three times the impression is created that market conditions are worse than they actually are. If you look at the paper every day as I do you are actually seeing the same notice published 3 times.
Much to their embarrassment in many cases, the notices state the borrower’s name, the date that the loan was made, and the address of the property, among other information. Furthermore, the date of the proposed Trustee’s Sale (which is a courthouse steps auction) is also provided. These foreclosure sales used to be a pretty good way to purchase property but due to our current market conditions and the bubble environment of the 2004-2007 period, most of these properties have more owed against them than they are now worth.
The way these courthouse steps auctions work is as follows:
- Literally on the courthouse steps, an attorney (or paralegal in some cases) reads the legal notice in it’s entirety and also the terms of the sale.
- The attorney then states the lender’s opening bid which is normally equal to what the lender is currently owed including legal costs, late fees, and any other charges.
- Bidding opens but all bids must be cash only – No financing is generally available because typically the high bidder must deliver a cashier’s check within anywhere from an hour to 24 hours after the sale is completed. For this reason, unlike a typical auction, these courthouse steps auctions are very sparsely attended.
- If no participant bids more than the bank’s opening bid, the property reverts to the bank and the foreclosure process is completed.
- The bank then will typically hire a realtor (like myself frequently) who will manage the property and market it at whatever the bank decides to sell it for. The bank is not limited to the price that they bid at the auction but can list for more or less than that amount.
The fact that there were 13 notices of foreclosure in today’s paper is an effective commentary on our real estate market’s current situation and is a very sad statement indeed. In today’s paper, one of the people losing a property is a friend, and all of these soon to be former owners are losing out. Still, not everyone is a loser. I have on occasion purchased a property at a very attractive price via a courthouse steps auction but it’s been a while. As I mentioned earlier, for the last few years most Gatlinburg area foreclosures are occurring at prices above the property’s current market value. Still, there is the occasional bargain…