On the first Tuesday in October at 9 a.m., the hallway of the Richmond County Courthouse’s first floor is packed.
Attorney Mark Wilhelmi juggles several bulging folders covered in sticky notes. Then he begins reading his roster of homes to be auctioned. “Next is 3007 Meadowbrook Drive, located in Augusta, Georgia.”
He launches into a small-print, fast-paced ramble of the property’s legal where-with-alls (which are identical to the public notices in the newspaper). His voice is monotonous, without the emotional dips and punctuations usually accompanying public speeches.
The cackling hallway full of potential buyers pays him no mind — yet.
He knows what’s going on, as he said later: “I must read the entire disclosure before announcing the beginning bid price.” He doesn’t find the nonstop chatting around him rude.
But once Wilhelmi completes the preliminary what-fors, the seasoned foreclosure attendees, as if on cue, go mum. It’s auction time.
Five of the hallway’s denizens move closer to Wilhelmi. He announces, “I open the bid at $45,000 on behalf of The Bank of Georgia. Do I have any additional bids?”
As the last syllable leaves his lips, a trio of would-be buyers begins a costly game of wits and dares. They rapidly outbid each other in $100 increments. The financial volley goes on for about five dramatic minutes.
One man is noticeably quiet and noticeably slower and more methodical in his bidding process. He had been watching the other two parlay their figures.
Finally the quiet one, like a seasoned poker player, lays down his hand. Preston Tutt had sensed they’d come to their max and he announced his bid: $51,100.
Tutt had read them right. The two call it quits. The quiet one now owns the property.
This scene repeats itself every month in Richmond County and in courthouses all over America. With the meteoric rise in foreclosures nationally — and particularly in Georgia — these auctions have become the mechanism by which a community reclaims many of the homes and, hopefully, begins to heal itself.
The woman bidding against Tutt, who tells me she would prefer to be identified simply as C.T., is a property investor and said she’s not disappointed at the loss. “I knew how high I’d go. Now it makes no sense for us. By the time we fix it up and put it back on the market, there is maybe $6,000 in it.”
Tutt, the auction winner, is happy. He and his son, Tony, have purchased the property for a man who works for them. The employee lost his home due to a mixture of bad luck and unexpected interest rate increases on an adjustable rate loan, a common story these days.
The Tutts will now hold a new mortgage at a fixed rate and save the man’s home. Should the beneficiary of their kindness not pay his new lenders, they will simply foreclose again and sell the property.
Tutt tells me this sale is a little different than his usual. He too is a property investor.
“I have been doing this for 30 years. I do all the research and see how the location is. Then I check with the tax office to see what liens the IRS or the county may have. I also check what the property values are in the neighborhood,” the elder Tutt said, acutely aware of the savvy foreclosure hunter’s methods.
This foreclosed property on Greene Street was sold back to the bank.
“Here’s a gem!” Wilhelmi says, starting again with a sarcastic tone. “The property is at 916 Greene Street — right next to the library. My bank has a loan on this property for about $282,000. The appraiser has appraised it for $350,000.” The attendees snicker and giggle. “I am going to start the bidding $90,000. Do I have any offers?”
The group is still. “Going once… going twice. Sold back to the bank.”
The scene is a living still life of America’s silent disaster, a mortgage crisis that has ripped into many more neighborhoods than Katrina. However, for those affected, it is as serious as any levee break.
But as the adage goes, one man’s loss is another’s gain. Auctions in the courthouse are the mechanism for returning foreclosed homes to the marketplace. Today’s group of potential buyers is socioeconomically mixed. None are money-hungry bluebloods with bulging wallets here to feed off the poor. And each buyer has a singular reason behind the bids.
The friendly murmur of conversation begins again as Wilhelmi shuffles through to his next auction.
“I see the same people here each month,” he says. “They come with cashier’s checks in different denominations so they can bid.
“If I have two people really close in price and one has all the funds, and the ‘winner’ has to go get the rest, the one with the whole amount takes it. I represent the bank, and they want to sell.”
C.T. tells me she is a monthly attendee of courthouse foreclosure sales. She comes to represent herself, as well as a group of property investors. She says a pile of pre-printed cashier’s checks is often the key to victory.
She adds that she always has a budget she will not exceed. Just before I arrived, she won her first auction in a year.
“It’s not as easy as people think,” she says as she gathers her belongings to depart, glancing with a fond nod to the regulars she sees remaining.
Another property being sold by an additional attorney in the corner garners no interest whatsoever.
In fact, one of the attendees tells me most don’t. Those ignored auctions are usually the properties for which the foreclosure price is too close to the true market value. For instance, if the home is being offered at $130,000 to pay off the mortgage company, but the current market value is $134,000, no one will bid.
Often the homeowners are losing the home because they are “upside down” in their mortgage. They’ve borrowed against nearly 100 percent of the value of their home. Now, with a soft real-estate market where prices are no longer increasing, they cannot sell the property for what they owe. As home sales decrease and prices level off, any small crisis can force them into the present situation.
The state of Georgia is listed on
Foreclosures.com as being in the top five of the foreclosure storm areas. In part, according to
Foreclosuredeals.com, that’s because foreclosures can happen so quickly. Georgia homes can go into foreclosure and be sold in 40 days. In other states, it takes up to a year.
But Georgia may not be the worst hit. According to CityWatch LA, “In the three months ending on June 30, 2007, foreclosures in Los Angeles County jumped an astounding 799 percent over the same period last year.” That figure is almost mind numbing.
There are more reasonable mortgages being auctioned. That’s what the people have come for.
Augustans Jackie and Lee Hood have found a home in a Hephzibah neighborhood they would love to live in. Absent a foreclosure sale, their desired area is priced too high for them. They are there to realize the American Dream and they have funds in hand.
However, they admit they do not understand the process entirely and hope they’ve done all the correct self-taught research. They hope that by winning a bid on a foreclosure, they will become first-time homeowner’s today.
“You do feel bad for the people who have lost their home,” Jackie Hood said. “But they had an opportunity to have something, then tear it up and destroy it. Or don’t appreciate it, then they don’t deserve it. I take a lot of pride in my home. So when I see something that is totally torn up, they don’t deserve anything out of it.”
In fact, the legal property descriptions tell only part of the story of each house for sale. By the time many homes are slated for a foreclosure auction, the houses are riddled with damages from the people who have lost ownership interest. Sometimes it’s mere neglect. Sometimes they take out their frustration and anger on the once-loved walls and structure.
Another group of buyers is there to rescue just such a home. They have banded together to “save their neighborhood.” They say a “Slim Shady” home on their street is on the auction block today and they have pooled their funds to buy and reclaim the eyesore.
People hoping to save their neighborhoods gather at the foreclosure auction
Though they prefer not to be identified, the spokeswoman said, “We want somebody in there with the same pride of ownership as us. We are so tired of this home’s yard and the way it just makes the whole street look bad.
“I figured something was up as it looked abandoned but it wasn’t. You know what I’m saying? It is bungle in the jungle over there. I just watched until I saw it listed in the paper under the foreclosures. The four of us have [pooled] our money and will buy it, fix it and sell it.”
Their hopes of improving their neighborhood are dashed as the spokeswoman learns from other experienced foreclosure hunters that they need to find out if there are any tax liens on the property.
Luckily, the county tax office is just a few steps away. Their financial expedition confirms the worst: The house is no bargain due to the exorbitant taxes levied against it. The result is disheartening, but is still better than a financial broadside. With the discovery, the group no longer has the combined funds to pay for the property today.
Wilhelmi said the hidden lien is all too common. “The 3007 Meadowbrook Drive property that we’d just offered at a start bid of $45,000 had two tax liens: one for about $7,000, and the other for $523,060 from the IRS.”
He said as unnerving as that taxes-owed figure is, it also provides the foreclosure buyer with a built-in safety net of sorts.
“The IRS usually does nothing about it, though, because there is no equity in it for them. But the key is a matter of there being ‘some equity.’ If they think they can get $20,000 out of you, they will try that first. They can ask for a lump sum and forgive the rest.”
He went on to say the IRS cannot take the property without you getting paid back the auction price, should you feel adding $20,000 (or what they negotiate) negates the investment potential. And the property sits in clean-deed limbo until the IRS makes their decision, which can take up to 120 days.
Tutt, who bought the home today, said he had done the research and knew of the Meadowbrook liens prior to bidding.
The profit margins can be high, though, and that is why some of these people are here. Today, Tutt is a hero for a man who would have been evicted.
But he is also a professional buyer-for-profit. He said he has purchased more than a dozen homes in peril. He has paid as low as $24,000 at a foreclosure sale and $1,300 at what they call a tax sale.
Another pitfall a would-be buyer of the foreclosure can face is the foreclosed seller bouncing back from financial ruin. “They [have the right] to buy the property back for the amount they initially owed plus 10 percent for your troubles in a tax sale.
“Now, you only get 10 percent regardless of any improvements you’ve done to the place. If they come back and you’ve fixed everything already? They get all those [improvements] for free. But I have never had it happen yet,” Tutt shared.
The default homeowner has a year and a day by law to redeem their home in a tax sale. States regulate the term of redemption in a foreclosure. South Carolina, for example, has legislation that the displaced homeowner has one year to reclaim the property should they come into funds. But in Georgia, 120 days appears to be the standard.
The term of redemption can fluctuate by state and property. All of these points should be well investigated long before a bidder appears at the courthouse sales.
Wilhelmi adds nonchalantly as he readies for another sale, “People should also know if they are buying a first or second mortgage. I am only representing one bank, one loan. They need to check with the county records on the property to know before they arrive.”
The home’s auction could be representative of only one of its mortgages. There could be an entire other loan outstanding on the property.
As things wind down after an exhausting seven hours of waiting between auctions, 4 p.m. comes. The day closes with many leaving the courthouse, eagerly heading to their new properties with keys and strategies in hand. And though the typhoon of foreclosures continues, these auction winners are already reclaiming their community.
