Tag Archives: Foreclosure

The Anatomy of a Foreclosure

In the hallway of the Kitsap County Courthouse sits a table of croissant sandwiches, cookies and bottled water. People — some dressed for success, some quite casual — mill about chatting, as if at a party. Cell phones chime and chirp. An infant, sitting on the floor at his mother’s feet, twirls a tube of “Butt Paste” scavenged from his diaper bag.

It’s Friday, auction day for properties in foreclosure, a scene repeated weekly. With the recession, the inventory has soared. It’s been a boon for Kevin Day of the Vestus Foreclosure Group, a Silverdale Company that helps ready properties for auction. Vestus works in partnership with The Legacy Group, also of Silverdale, which provides interim financing to clients. Day and Shaun Guerrero of Legacy coach prospective buyers through the process and often bid in proxy for them.

Chelle Anderson of Seattle is one such client. She, her husband Luke and four kids, ages 8 years to 9 months, live in an 800-square -foot rental. They’ve been following a short sale in Kitsap County for about 6 months now. Financially speaking, buying a foreclosed property is their only hope of home ownership, and Vestus “is our only option even with an auction.”

The property, which Anderson heard of through her mother, a Gig Harbor resident, could come up for auction today. How does she feel?

“Nervous,” said Anderson, even though she won’t do the actual bidding. “My heart’s beating. I feel like I’m going to have a baby.”

The facilitator’s services are 3 percent of the purchase price, plus closing costs, which includes a blanket insurance policy. Guerrero has encountered not so mysterious cases of concrete dumped in toilets.

Standing at one end of the hallway, a woman reads legal babble from a sheet of paper. Nobody pays any attention to her. She is “crying the sale” as it’s known. After some minutes she finally concludes her notification of the exact legal description of the property, the minimum bid and other details of the offer. No takers. “Going once, going twice.” The woman has done her duty. She folds up the the paper and leaves, unwilling to give her name to the press.

Another crier launches into her litany about a 2,500-square-foot split level in South Kitsap (not Anderson’s target). Day and others hover near the crier but generally disregard her until she opens the bidding. It’s Day versus Julie Powers, an Olalla resident and licensed real estate broker whose primary job for 15 years has been flipping houses.

The bidding starts at just more than $200,000 for the home, valued at about $350,000. Powers and Day, who’ve done this dance before, lob offers back and forth, along with the banter of friendly foes.

“Just get to your number, so I can beat it by a dollar,” Day says, as the bidding approaches $260,000. “You realize this is way out of your realm.”

Powers is a fierce and seasoned competitor, but Day takes the property with a bid of $267,000. “It’s OK,” says Powers. “There’s others.”

The supply of foreclosures and short-sells has yet to show signs of dwindling, since the onset of the Great Recession. It’s been a heyday for folks like Powers, Day and Guerrero. It’s also drawn plenty of newbies.

“There’s a lot of naive folks, and a lot of folks who just come to learn,” Powers said.

She usually juggles two houses at a time; she’s done three, but it makes her crazy. She hires out the often-extensive renovation work to subcontractors, or buyers will offer sweat equity. It’s a highly speculative venture. Properties can have undisclosed liens. Buyers take them “as is.” Powers, got burned early in her career, but now is wiser.

“I’ve been doing it long enough that now it’s more of a calculated risk,” she said. “I like it, the risk, actually. It’s high risk, but that’s what keeps it fun.”

Byron Harris of Silverdale is another speculator who looks like he’s having fun. Harris in a white Hawaiian shirt is a partner in B.H.D. Holdings LLC of Silverdale, which deals in properties in Kitsap, Whatcom and Skagit counties, as well as Southern California. He got into the business a couple years ago, he said “trying to make lemonade out of lemons. They’re all lemons. We just try to squeeze ’em.”

Harris clearly enjoys schmoozing with his fellow speculators. “It’s just like one big dysfunctional family,” he said.

What kind of personality does it take to survive a business with so many potential land mines? “A foolish gambler,” Harris says, with a joker’s glint in his eye.

No, he doesn’t gamble. But he is heading to Las Vegas that afternoon for a half-marathon.

Any advice for would be speculators? “Stay away!” Harris says. And the raucous foreclosure fraternity cracks up.

Anderson’s house does come up for auction. It is held by two banks, and one bank essentially buys the other out, shouldering other bidders aside.

“I heard the news and just started crying, because I thought we’d lost the house,” Anderson said.

She leanred, however, that this is a common practice and doesn’t mean the price for the house will soar beyond her reach. Vestus will approach the bank with an offer and try to get it for the family before it goes on the market.

“We’ll see what happens,” Anderson says. “I’m still holding out hope.”

Note to readers: This is just a quick snapshot of auction day. It’s not meant to disregard the experience of those who have lost their homes to foreclosure.

Chris Henry, reporter