Think “foreclosure” and the image that springs to mind is often the ramshackle, boarded-up house on the wrong side of town.

Those homes are still there, along with lots of upscale digs, in a list that experts say is growing fast as the housing market cools and sharply higher interest rates kick in on adjustable-rate mortgages.

But if you’re a house shopper thinking this is a great time to land a cheap home at the next sheriff’s sale, be forewarned: The numbers don’t tell the full story, and trying to buy a home this way can be an extremely risky, time-consuming and even costly proposition, especially for the novice.

The numbers do appear staggering: In September 2005 in New Jersey, there were 967 filings of lis pendens — the first stage of foreclosure. This September, there were almost 1,650 filings — a whopping 71 percent increase, according to the foreclosure data service Sheriffsalesonline.com.

* * * IF YOU GO… • Sheriff’s sales are held weekly in county courthouses: Fridays in Bergen, Tuesdays in Passaic and Mondays in Morris (Tuesdays after Jan. 1).• Information on properties available can be found in newspaper advertisements or picked up at the county sheriff’s department or in Morris County, online at mcsheriff.org.• You must have between 10 percent and 20 percent of the total sale price in cash at the time of the auction. The remainder must be paid quickly — usually within 30 days. The money must be paid, even if the previous owner is still occupying the property.• For more information: Passaic: 973-881-4200, Bergen: 201-646-2200, Morris 973-285-6600.

Those findings are echoed locally, according to another foreclosure tracking company, RealtyTrac. In the third quarter of 2006, there were 947 properties in all price ranges at some stage of foreclosure in Bergen, Passaic and Morris counties. That’s a 100 percent increase compared with the third quarter of last year.

“These days a lot of these houses are not in disrepair, it’s just that people can run into financial trouble no matter where they’re starting from,” said Jeff Posner, who runs the Fair Lawn-based sheriffsalesonline.com.

Celia Chen, director of housing economics for Moody’s Economics.com, noted that adjustable-rate mortgages that allowed buyers to capture low interest rates for several years — sometimes as low as 3 percent — are now re-setting to higher rates, and owners are paying the piper.

“In some cases, these monthly payments are doubling,” Chen said. “A good share of these buyers were barely qualified for a mortgage even at those lower interest rates.”

Increases in foreclosures also are seen anytime the real estate market slows, said Rick Sharga, vice president of marketing for RealtyTrac.

“If a homeowner is in financial distress, the last two things they need are an extended time to sell and lower prices,” he said.

With all the doom and gloom, only one in four properties that enter a stage of foreclosure are actually foreclosed, said Mike Fratantoni, senior economist for the Mortgage Bankers Association. In most cases, lenders work out deals with the owners, or owners sell or file for bankruptcy.

And, he said, the group’s data also showed that out of the 1.2 million existing loans in New Jersey, less than 1 percent were in a foreclosure stage in the second quarter of 2006. That’s a similar figure to last year.

How to explain the disparity? Each side argues that the other has an agenda and can tweak numbers slightly to serve their purposes.

The Mortgage Bankers Association noted that foreclosure-tracking companies are selling a product — the data on properties — mostly to investor-buyers. Sharga, of RealtyTrac had a similar point.

“If my funding came from lenders … I would probably lean toward a more conservative approach and get the message across that everything is going along fine,” he said.

For a buyer looking for a deal, once a home does go into foreclosure, bargains can be found. Bidding on a Franklin Lakes home up for auction in October at a sheriff’s sale started at $631,000. The property sold for $835,000, but one investor said his estimates put the home’s value at $1.75 million, though that’s not typical.

But foreclosure buying also brings a huge amount of personal legwork, risk, expense and responsibility. First, you’re often bidding against banks, or savvy investors who buy and resell properties quickly. Second, foreclosed owners get numerous time extensions, which can tie up a buyer’s money.

Disgruntled owners have been known to sabotage their properties. Buyers should always do title searches on properties to make sure there are no outstanding tax liens or hidden secondary mortgages.

“This is like buying options on futures — it’s as risky as you can get in the real estate business,” said Dennis Kessler, a Sayreville real estate broker who specializes in foreclosures. “Yet, we have new people showing up at the courthouse for every sheriff sale.”

Posner said foreclosure buying can be a boon for an aggressive, informed and confident buyer, saying he’s seen savings up to about 20 percent.

“As the market gets worse, it’s probably going to get even easier for the average residential buyer,” Posner said. “Nothing is selling these days … so you’re not going to be competing with as many investors — if they can’t flip it themselves, they’re not going to want it.”

Sheriffsalesonline.com is just one of many companies that sells data on properties in foreclosure. The service charges $40 per state, per month. Most of the information is public record, but Posner said his site makes searches easy, comprehensive and quick.

For both investors and personal buyers alike, Posner said the best way to get a foreclosure property is to knock on the owner’s door during the early stages and express an interest in buying.

“It’s awkward, it’s not easy,” he said. “But often an owner in foreclosure would rather see the property go to another owner, rather than the bank.”

Additionally, owners can be persuaded to sell because it often reflects better on their credit history than going through with a foreclosure, he said.

Establishing a relationship with an owner allows the buyer to not only see the property in person and obtain the all-important inspections, it also makes the transition easier from foreclosed owner to new buyer.

If a property is bought at a sheriff’s sale, the new buyer has the responsibility to evict the foreclosed owner. Often it is more cost-effective to offer the owner a cash incentive to move out quickly, rather than fight in court, Posner said.

Kessler, the Sayreville broker, cautioned that foreclosures are not always a bargain.

“Most of the people currently owe more than the property is worth,” he said.

For example, a home may be worth $425,000, but the foreclosed owner owes $450,000, thanks to high interest rates or an adjustable-rate mortgage. When the property goes to a sheriff’s sale, the bank will often want to recoup its investment — the higher amount — no matter what the home is worth now, Kessler said.

About 40 people attended a recent sheriff’s auction in a wood-paneled jury room at the Bergen County Courthouse in Hackensack. Three properties — in North Arlington, Oakland and Cliffside Park — were auctioned by a uniformed sheriff’s officer; a total of 20 had been listed for sale, but most were postponed to later dates.

As each of the three properties were offered for sale, a bank representative stood up and read a statement warning prospective buyers that the property in question was subject to sale “as is,” and may have liens on it. Then the bank representative said the bank would be willing to bid an amount greater than the unpaid judgment.

In all three cases, the bank won the bidding — in two cases, without any competition from the audience. The entire auction was over in about five minutes.

The vast majority of bidders at sheriff’s sale are investors like Raj Patel, who said he buys about 15 to 20 properties per year at foreclosure and flips, or quickly resells them. He also bought his own home that way, paying $475,000 for an Edison home that in 1994 was worth $675,0000.

Patel has a real estate license and pays several employees to assist him with the process, from investigators who scope out properties to bookkeepers. He estimates that he can earn $75,000 to $100,000 per property after deducting money spent to buy the home, repair it, pay taxes and other expenses while he’s flipping the property.

Patel estimates that about 75 percent of the people he sees at sheriff’s sales are investors like himself. Patel was the investor who bid on the Franklin Lakes property, but ducked out when the bidding got too high.

Staff Writer Kathleen Lynn contributed to this article.

BY Jeffrey M Posner
SheriffSalesOnline.com

If I had to guess, I would say that 40% of the phone calls we get here at Sheriff Sales Online are about the quality and timeliness of our information. We have even received calls that just wanted to see if we would pick up the phone. “I just wanted to see if someone would actually answer?” they say. The funny thing is that I can’t blame them. I have also been ripped off by many foreclosure/real estate services in the past claiming that they had the info with special bells and whistles to boot, but after signing up I realized they just had all the bells and whistles integrated with their crappy information. I’m sure most of you have experienced similar results from web services you may have purchased in the past and I hate to say it, but the foreclosure web site business has a bad rap. There are lots of sexy and super hi-tech foreclosure sites out there, so you have to be careful. I have seen quality hi-tech foreclosure sites with crappy information and the most basic crappy looking site that had the best and most current info. Real Estate is behind the times with technology and is still making its climb up the internet ladder.

Nationwide Services

It is virtually impossible to cover every area in detail unless you have someone local to the area following it on a county level in most cases. Almost all nationwide foreclosure web sites have a heavy concentration with REO (Real Estate Owned) and Realtor® properties. Now I am not saying that these sites are not worth the money, I would just like to clear the air on how up to date and closely followed their information might be.

Pre-foreclosure information is everywhere, but accurate foreclosure sale information with sale dates and owners about to loose their properties is not. Most deals go down towards the END of the pre-foreclosure process, not the beginning. A property is a pre-foreclosure until the day it is sold, the sale is it being foreclosed on, and once foreclosed on it is not REO (Real Estate Owned by the bank or a buyer from the sale)

Here are a few questions that you can ask when researching a foreclosure web site, that is if they answer the phone

1. How often is your information updated?
2. Where do you get your information?
3. Are you just re-selling this information from another provider?
4. Are you local to the area you serve?
5. If I give you a property in foreclosure right now, can you find it for me on your site and tell me about it?
6. What’s the story behind the site? Why was it created? By who?

Leave a comment with any questions, thoughts, or experiences…

A “short sale” or “short pay” as some people may call it, is just a discount. When talking about foreclosures and real estate, a short sale is used to describe the process of a party trying to discount a lien on the property. Most short sales are done under distressed circumstances to the property owner and are usually taken as a last resort on the lien holder’s part.

The process of doing a short on a loan can be quite tedious at times. It involves a lot of time on the phone with lenders and other parties to negotiate the discount and if there are other liens on the property the process progresses. Although a great technique to lower the price on a property, it usually comes at a cost to the owner as the discount will count as income to them and they are NOT allowed to receive ANY money from the sale.

If you are thinking about trying a short sale I would recommend that you have someone who has done one before (or better yet an attorney – in most cases) assist you in the process.

Any Questions?

By DoItYourself.com
Staff Decks are more than just lumber and nails, they are a place of memories. Decking can be expensive, so understanding the various materials is crucial to making a cost-effective decision. Before purchasing the material, you will want to define the goals of the deck:
Will you have the time to maintain the deck through the seasons? Is the deck going to be a focal point of family gatherings? Do you plan on staying in your current home for a long period of time?
Answering these questions should narrow the number of materials to use. If you have little time to maintain a deck (staining, cleaning, and refinishing), a natural wood may not be the best choice. The beauty of natural wood is undeniable. Redwood and cedar decks have been a popular choice for homeowners throughout the country. However, natural wood needs to be waterproofed every couple years. This costs time and money – which you may not have available. In recent years, composite decking material has risen in popularity. Composite decking is offered in various textures and colors, but its main selling point is little to no maintenance. It can be cleaned with common household cleaners and provide years of enjoyment.

If the deck will be the center of family gatherings, choosing the right material is important. For example, selecting an exotic hardwood for your deck – especially with small children around – can lead to dings and dents. When chair and tables are moved the deck may be scratched, which will mean time spent fixing it. If you anticipate hosting people on your deck, a resilient material may be your best choice.

Another factor to consider is how long you will stay in your home. If you plan on staying in you home long-term, choosing a durable material will provide years of enjoyment. However, if you plan on selling your home in the near future, it can drain valuable resources. Decks can add to the value of a home, but it may be difficult to recoup the expense during the sale.

Decking materials are as diverse as the people that buy them. Visit your local lumberyard and investigate the materials available in your area. Compare the selling points of natural wood and composite materials to your specific decking needs. Using the right material can provide all the cherished memories you remember as a child.

© Doityourself.com 2006

BY: Jeffrey Posner
SheriffSalesOnline.com

So you have just successfully purchased your first foreclosure property at the local foreclosure auction and you wonder, now what? Well in most cases there will still be an occupant in the house who will now become your tenant. If the occupant is a renter things will usually be easier, but if it’s the homeowner it may get difficult. First thing you should do is make sure that the foreclosure sale you made is actually going to go through. In New Jersey there is a 10 day redemption period where the property owner can go to the sheriff and pay off the balance in full to get the property title back. So in many cases here investors may lay back a little until they know it is theirs for sure.

Once the sale is final, a great way to approach the situation is to offer the occupant money to leave so they can get a new rental. An eviction can be quite costly not to mention time consuming in the process so this can be a nice way of one hand washing the other.

In the case of disgruntled homeowners, you may be forced to proceed with an eviction. Just follow the normal proceedings and use a good lawyer. Let the legal process do its work, but make sure you file as soon as possible to get the ball rolling. If the occupant has children, financial issues or if it is just is close to the holiday season you are likely to be delayed. Typically, an eviction takes about 3 months if filed correctly and on time.

BY: Jeffrey Posner
SheriffSalesOnline.com

Did you know that New Jersey entitles every homeowner in foreclosure to two separate two week adjournments? That’s right, so once the sale is advertised (one month before) it may actually take two months before it makes it to the auction block. Many investors get frustrated by this in the beginning of their career because they feel that nothing is ever getting sold.

You just need to understand the foreclosure process and that it is always being delayed any way it can. Think about it, if you were personally in foreclosure and about to loose your property, you would do everything possible to keep it and that is exactly what’s happening here. Properties get adjourned all the time in this business and the key to it all is keeping track of it.

The Plaintiff (in most cases the lender) can adjourn the sale as many times as they feel necessary and the Defendant can always do a Bankruptcy to freeze everything altogether. If a sale seems to be adjourned too frequently it is possible there is a work-out agreement in place with the lender or the property owner is working with someone else who is helping them through the foreclosure.