As we predicted way back during the Lehman crisis, foreclosures auctions in Manhattan would be very rare. Sure, a few condo developers in New York would eventualy be forced to either reduce prices dramatically or put unsold new apartments and lofts in auctions to move inventory. But certain factors here keep things from going under the hammer. The pace has been slow and the auctions rare for units in the hot downtown Manhattan market. But there has been some movement, as the New York Times now reports. Below are a few smart tips on how to approach the auction and foreclosure game:
In addition to inspecting the property, prospective buyers should ask how the auction will work, if proof of income or seriousness is required, if the auction is absolute (meaning the seller will accept any price), and whether there is a buyer’s premium. Most auction houses charge a premium of 5 to 10 percent of the total purchase price.
Research the neighborhood so you know what would constitute a good deal. Set a budget, since the excitement of an auction can inspire bidders to raise their offers.
Most auctions require advance registration, and some require the purchase of a bidder’s package that includes details about the condo, bidding procedures and the terms of the sale. Most auctions require a deposit of some kind, for example 10 percent of the purchase price.
Many auction sales close 30 to 60 days later. If you have a winning bid on a co-op, you still need to meet the board’s approval. If your financing falls through, or you wait until after the auction to get financing and don’t qualify, you will lose your deposit.
There is stuff out there to be found. The key is to know how to do a deep search and conduct due diligence. Good luck.
