New York and New Jersey Court Auctions

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New York and New Jersey Court Auctions

Solon S.
NYC · Member since 2015 · 27 posts · 14 votes

Hi all,

I live in NYC and wanted to see if there were any experienced investors on here who have firsthand (and even secondhand) experience with auctions in and around New York City. I've checked some of the properties on the Bronx, Queens, and Brooklyn county courts and they seem to be much more reasonably attainable than those listed on the MLS.

As for procedure, I know that I need to do my due diligence. I'm going to check out any property that I am going to bid on in person to see the damage and also if there are any residents. I'm aware that some people recommend a title search, but would it be necessary if I purchase title insurance and check Acris as well for any liens. When a property is sold on auction, aren't all secondary liens removed other than mechanic's liens (and shouldn't I have picked that up by checking Acris)?

Last thing, the 10% deposit is due up front, but then I have 30 days to secure the other 90%? I intend to use a hard money lender for the acquisition and repairs, so I want to make certain. I've read on some places that other auctions around the country, the balance is owed the following day, but I'm sure that NY State is 30 days. I just wanted to confirm.

Also, please feel free to include any other information or nuances in the post that you believe I should be aware of. I'm sure that there are some things about the process that you don't pick up unless you have done it before. And if you're active in other auctions in Nassau, Suffolk, Westchester counties or New Jersey, please let me know. I'd love to pick your brains.

Thanks again.

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Lisa D'Alessio
Dobbs Ferry, NY · Member since 2017 · 5 posts · 7 votes
9y

Hi Solon,

I am a New York attorney and I regularly act as a court appointed referee in Bronx County. Bronx property auctions are conducted on Mondays at 2pm in courtroom 600.  The courthouse is located at 851 Grand Concourse. The auctions are open to the public, you should definitely come down at least to observe. 

They are competitive, and there are some regular players who battle for the better deals.  10 percent is due at the auction in cash or bank check. Balance due at closing. The closing is supposed to happen in 30 days, but depends on the schedules of the attorneys. So it may be later than 30 days. 

Hope this helps. 

Lisa D'Alessio Lia, Esq.

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  • Lisa D'Alessio
    Dobbs Ferry, NY · Member since 2017 · 5 posts · 7 votes
    9y

    Hi Solon,

    I am a New York attorney and I regularly act as a court appointed referee in Bronx County. Bronx property auctions are conducted on Mondays at 2pm in courtroom 600.  The courthouse is located at 851 Grand Concourse. The auctions are open to the public, you should definitely come down at least to observe. 

    They are competitive, and there are some regular players who battle for the better deals.  10 percent is due at the auction in cash or bank check. Balance due at closing. The closing is supposed to happen in 30 days, but depends on the schedules of the attorneys. So it may be later than 30 days. 

    Hope this helps. 

    Lisa D'Alessio Lia, Esq.

    4Reply
  • Mateusz Prawdzik
    Developer · Little Ferry, NJ · Member since 2016 · 426 posts · 226 votes
    9y

    @Solon S. Okay, so I live in Jersey and just recently started to go back to auctions for the reason that I am looking to for something to pick up as I try to have 4 properties going at all times. I am selling 2 shortly... So there are a couple of things happening now in the market and the auctions. 

    1) 800k+ in most of the US is sitting. My partners 1.1M Chatham is Sitting.. Our 2.4M Chatham is sitting. 900k Berkley Heights sitting. My 800k Bergenfield is almost done and is going to be sitting. There is a lack of inventory for the properties that are luxury because of some uncertainity in the market and the richer don't want to spend right now. I think it's because of the tax code change Trump wants to do.

    2) The bank wants to much. Classic case was yesterday.. I went to go look at a house in Scotch Plains yesterday. My max bid was 270k (I was willing to pay that.) Bank started 400k... on a POS that needed like 250k into it..

    3)People don't care what they pay. See this all the time... People that are newbies literally don't care what they pay, they just want to be in the business because flipping house is "cool"... "Everyone is doing it, I want to do it too." These CNBC shows are causing people to NOSE DIVE into a house they will go upside down on.

    4)Too many people in general. I use to be able to take up 3-4 seats the auction like 1 year ago... now you go and you have to cram 3 people into one spot... 

    Those are the things I am observing. 

    Next, let's talk about 20% down. You need 20% down on the winning bid.. You need to come up with 80% cash to close on it or wholesale it within 30 days (I have seen people drag it out 3 months if you know the secretaries at the sheriffs office). I don't know if HML will lend on sheriffs sale properties. I think they can't because they can claim first lien on it, so you need to come up with cash, buy it and then refinance out.

    I am starting to go again and check out where the prices are at, but unless you befriend the sharks and agree with them to take some and lose some... chances are you are losing everything on the auctions because A) the sharks with out bid you. B) the bank wants too much. C) the newbies come and are willing to pay crazy amounts on it. 

    3Reply
  • Solon S.
    OP
    NYC · Member since 2015 · 27 posts · 14 votes
    9y

    Thanks for the feedback.

    @Lisa D'Alessio I'm going to be at the Bronx Courthouse this Monday to bid on a house that I want, perhaps I will see you there. Thanks for confirming what I thought. It's helpful to get feedback from someone familiar with the process.

    @Mateusz Prawdzik Great feedback. I can imagine that the higher end market is sitting for a while. I follow a lot of the properties in the Bronx, and houses that are being listed at $400k-600k are sitting for quite a while. The thing is that a lot of these agents are just putting houses on a ridiculous valuation to inflate the market. Then their contract expires, and the house is relisted with someone else for $25k less, by which time the market has risen a bit making it a little more reasonable.

    I agree with you that banks are ridiculous in their asking prices. Some shortsales that I've seen, the banks want near full ARV despite damages and sometimes having delinquent tenants still in there.

    Also, what counties/courthouses are you mainly in? I know for NY, it's 10% down and the rest up in 30 days. I may also likely venture into NJ where my uncle is already flipping lower end properties due to affordability. I may want to pick your brain on NJ.

    Last, out of curiosity, do you think higher property taxes would incentivize banks to offload their inventory faster as they wouldn't want to keep paying high taxes on their inventory? I would've thought turnover in Jersey would be quicker as taxes are among the highest whereas in NY, taxes are lower in high population counties and banks can afford to hold onto their inventory for longer for a bigger payout. Not sure what your take is on this.

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  • David Weintraub
    Lender · Berkeley, CA · Member since 2017 · 1k+ posts · 549 votes
    9y

    @Solon S. county by county, not state by state, when it comes to down payments.

    Most NJ counties want 20% down, and 80% in 30 days.  Philadelphia wants 10% down, and 90% in 30 days.  Bucks County, PA wants 10% down and 90% in 10 days, as I believe Montgomery Cty (PA) does as well.

    Union County is very quick on deed recording, which enables HMLs to fund deals more easily.  Essex County not as quick.  

    Every place is different.

    And while @Mateusz Prawdzik is correct that people are watching TV shows and wanting to become investors, that's not the only reason for crowded rooms.  Back in '09-'15 there was so much more inventory.  There are still over 30,000 homes in NJ alone that are in the Foreclosure process that can/be flipped, but there were MANY more  a few years ago, so the surplus was great enough that you didn't need to go to every auction.  Now there are fewer properties, more bidders, and tighter margins.  

    But if you know what you're doing, you're in good shape.  I have a borrower buying ELEVEN properties in a portfolio, all in NJ, all great properties.  But he has to taken them all.  

    If you have questions hit me up.  

    1Reply
  • Jennifer PetrilloPro Member
    Investor · Asbury, NJ · Member since 2015 · 226 posts · 205 votes
    9y

    That is why we stick to ARVs of high 200s-low 300s. There is a scarcity of these properties in our market, middle class buyers are looking for something nice and fixed up, perhaps a starter home or maybe something they can raise their kids in, but most of what there is in our county is McMansions (>400K) and old falling down farmhouses (<200K). We buy in the best school districts and don't mind very distressed (cheap) properties that we can add a lot of value to and still have a good profit margin. If it is a good property at a decent price, it will sell. I believe the buyers are out there, but we investors are not providing them with the opportunities they want and need!

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  • MC Crosby
    NY · Member since 2018 · 17 posts · 4 votes
    7y

    @Lisa D'Alessio 
    Hi Lisa, 

    Your reply here was very helpful, thank you. If I may, I'm trying to research an auction that's coming up in my neighborhood and while I found preliminary info on Acris/DOB/NYC Tax, I'm unsure about how to find 100% of the liens outstanding. There is a referee/attorney noted on the property – based on your experience, would they be receptive to providing that info? Or will they not engage outside of the actual auction? Also, if you have a reputable title company that you recommend, I'd very much appreciate it.

    Thanks,
    MC

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