Buying foreclosures at the court house in NC

[Ben Kirchner]

I'm seeking those who have experience successfully, or unsuccessfully purchasing foreclosures at a court house in North Carolina.  We are looking in the Durham, and Raleigh area.  It does seem quite competitive.  Given the process involves many trips to the court house, many bank withdrawals to place your bid, much time to be outbid, etc...  We're wondering if we're just spinning our wheels here.  Also wondering if there are other areas in NC where we would have better luck closing on a foreclosure. I do remember a BIggerPockets podcast where an investor here said there was so much inventory in Fayetteville, NC, that she couldn't even keep up with it.  Would love to connect with some people experienced with the process!

[Chris Martin]

From a former Wake county courthouse buyer perspective, what I see is very few S-TR filings and lots of capital chasing those few potential sales. The result is a very low foreclosure premium from what I experienced years ago. The premium is now basically zero, and the risk/reward ratio puts the buyer in a disadvantaged position. See my post on this other BP topic (When will the Raleigh-Durham market cool down?) for an example ($300,100 courthouse steps purchase on a $126,600 original note.) There was a time when there was a legitimate foreclosure discount but those days were a long time ago, during and after the Great Recession. I knew the game was over when AH4R ran out of MLS property to buy and showed up in the Special Proceedings room.

You may be able to find a deal occasionally, but for me the opportunity cost of 'winning' a few percent of the time vs. the time/effort involved is not an opportunity worth pursuing. Of the couple dozen or so properties I bought from the courthouse steps, more than half had no bidders (other than me). And in this market the other phenomenon you may experience, like I did in 2006~2008 timeframe, is that when you do bid, others with lower margin expectations will step right in and file a SP-403 (upset bid) right behind you. They let you (or me in my case) do the hard work and then they take the deal. My philosophy is 'if you swim against the current, you will drown.' So at the moment I am (still) on the sidelines.

My 2 cents.