Location: When did you start tracking foreclosure data at PropertyShark?
Mr. Staniford: We started tracking foreclosures since the beginning of the company, which was about six years ago. It really started out at a very low level; we actually had one person going down to the Brooklyn auctions. Once we started getting a following, we expanded our services, and now we let users look at the results of auctions.
General investors can use our Web site to track properties that get sold, and figure out what they need to bid on properties in order to make purchases. And taking that a step forward, you can look at properties that are going into foreclosure, and start doing your due diligence and come up with a valuation that you would bid on that property.
Obviously, there are lots of foreclosed homes in certain neighborhoods in Queens. What is happening to houses there after they are foreclosed on?
When a property is under water, there isn’t going to be an opportunity at the auction unless the banks themselves are willing to accept a lower upset price. And one thing we are seeing is an uptick in the number of transactions that are going to investors, and that is a good sign for us. I think, ultimately, one of the biggest problems right now is just finding cash, and whether it’s hard money lending, which is usually the case for foreclosures, or just cash in general. You’re not going to get normal financing for foreclosure purchases.
Are banks holding on to foreclosed properties?
For the most part, yes, or at least I have not seen a concerted effort to release all of these properties. You’ll notice if banks are looking to sell the properties if they really start cutting the prices.
What about a place like Jamaica, where there are hundreds of houses?
[Banks] do whatever they can. If you’re an institutional investor that is willing to purchase a portfolio of properties, I am sure that the bank would be willing to talk to you. However, there just isn’t that many people who are interested in property in neighborhoods like that, regardless of price. As an investor, myself, I would look at it and say, ‘In order for me to purchase property in an area, I want to see stability and I want to see the bottom.’ I don’t want to catch the knife here; there is no point or upside for me to do that. If you start seeing this urban blight, where there are lots of vacant homes, that is not a good situation for anybody. The situation is a little bit toxic in certain areas.
What do you expect to happen in the foreclosure market in the next six months?
I think it will increase. In the past, the market has been driven by the subprime situation, whereas now we have this overall economic malaise, if you will. Moving forward, I think you are going to see more ‘normal’ foreclosures. People are starting to lose their jobs, and most of these people have always had good credit and paid their mortgages on time; but now, they have lost their jobs and suddenly can’t pay their mortgages. So we are going to see more of those, but I also think we have another wave of the subprimes coming as well. Coupling those together, I think we have more foreclosures on the horizon.
Do you think the overall market will swing back anytime in the near future?
I think that in about six months there is going to be a significant increase in the interest in the area. I know that there is plenty of cash sitting on the sidelines, and once that cash, which is conservative cash, starts coming into the market, we are going to see the bottom. Then I expect a conservative increase off the bottom. If I could be so bold, I am looking for an overall bottom of the New York market by about the spring of 2010.