Bargain Hunters, First-Time Buyers In Frenzy as Palm Beach Foreclosures Soar

Florida foreclosure filings may have slipped over the last month, but here in one of the state’s more affluent counties, you certainly would not have guessed it.

Trouble making the Florida mortgage payments has created some of the biggest bargains in some time, allowing buyers to snap up pieces of Palm Beach real estate for tens of thousands less than what they might have paid only a few months ago.

And this trend may not be ending anytime soon.

People are doing whatever they can to sell in order to avoid falling into foreclosure. Notices of pending foreclosures are beginning to pile up in what many believe to be the first wave of a trillion-dollar tsunami — the dollar volume of adjustable-rate Florida home loans, and their interest rates that will be ratcheted up over the next several months.

How extreme are we talking? Palm Beach County foreclosure filings rose by 34 percent in June compared with June of last year, according to data from RealeSTAT.com. July numbers show a similar upward trend, not just for Palm Beach County, but for the state as a whole.

“It’s just going to get worse and worse,” said Jeff Pashkow, President and Chief Executive of Foreclosure Clinic, a Loxahatchee, Fla., firm that buys homes before they are auctioned by the lender, then resells them.

Clients these days are not necessarily lower-income residents, but those from such well-to-do areas as The Acreage and Wellington.

“They’re mostly (middle class) people who have financed it to the hilt, and there’s really not much you can do for them,” Pashkow said.

However, the numbers also pinpoint the emergence of unlikely rescuers. Bargain hunters everywhere are snapping up homes from people on the brink. In the U.S. as a whole, almost one in every three homes designated at risk of foreclosure was bought in July.

Local figures show that even as larger numbers of Florida mortgage loans slip into default, the number of homes actually making it to auction is decreasing, the Palm Beach Post reports.

Unlike Texas, where a foreclosure can become final in as little as three weeks after the homeowner gets served with the first notice of default, Florida homeowners get about six months between the time they are first notified they are facing foreclosure and the time the lender actually auctions off the property. Even longer if they play their cards right.

The smart money, experts say, is ready to go looking for deals.

Eager real estate investors are usually first in line to carve profit out of a sale of distressed properties. But it’s not just them, it’s the average buyer, too. Diane Corbin, a Realtor with Exit Realty Neighbors in Palm Beach County, has gotten many calls from first-time buyers asking if a property was in foreclosure.

“There are more than we have ever seen before, and I’ve been doing this for 20 years,” said Stuart Gitlitz, a Miami attorney who represents lenders in Palm Beach County foreclosures.

It’s no wonder. From March through May of this year, the average sale price of a home in Palm Beach County sold at the foreclosure stage was just $195,705. That’s more than $200,000 less than Palm Beach County’s median home price in June 2006, which was $405,500, according to the Florida Association of Realtors.

It’s a fraction of the $582,000 average Palm Beach County home price in May, as reported by Trend Graphics.com, which compiles listings. And it is almost exactly the amount considered affordable for a worker earning the median income in West Palm Beach, according to South Florida workforce housing advocates.

The fire-sale prices have their drawbacks, however, namely that many new homes in the area are sitting empty. The inventory of homes waiting to be sold in Palm Beach and St. Lucie counties is rising. Corbin cites the case of local developers who were selling a home a week — and who are now selling a home a month.

“It’s killing them,” said Corbin.

The allure of quick profits may also be attracting buyers who seized on buying a house or a condo at the height of the market and flipping it not long after.

Homeowners have reason to be cautious, too. It’s not unusual for owners notified that they are about to experience Florida home loan default to be swamped with unsolicited offers of help, said Gitlitz — some a lot more genuine than others.

“There is a lot of fraud going on,” he said.