Real estate investors are making a big splash at foreclosure auctions in California and across the country, the website ForeclosureRadar is reporting. The Golden State had the most third-party auction sales in the nation in January, with bidders purchasing 3,964 properties for $766.2 million.
Properties sold at auction are purchased for cash, with no title insurance or prior inspection allowed, usually by investors either adding to their rental holdings or, often, intending to quickly rehabilitate units and “flip” them for a profit.
There has been talk that another “wave” of high foreclosures is on the horizon, given a recent increase in delinquency filings. ForeclosureRadar’s founder and CEO Sean O’Toole disagrees, pointing to the increased investor appetite as a mechanism to keep many foreclosures from hitting the market.
“January’s numbers should put to rest any notion that we will see a wave of foreclosures in 2012, at least in the western states that we cover,” says O’Toole.
In San Diego County, while Notice of Default filings which signal the beginning of the foreclosure process are up 12 percent from December with 1,495 properties entering foreclosure last month, the numbers still represent a decrease in foreclosure starts from a year ago. Further, with 1,696 Notices of Trustee Sale signaling the completion of a foreclosure filed locally during the same period, 2012 is starting off with fewer overall properties in default.
Of properties that do end up going to auction, 515 ended up with ownership reverting to the foreclosing bank last month, a 41 percent decrease from January 2011. Investors bought 318 properties, up 19 percent from the 267 they bought in the same month last year.