If you’re looking to buy foreclosure homes in Texas, Jack Zagunis from 4Closure.info joins Scott Carson to explain about foreclosure auction and what buyers need to understand about these listings. Jack has 11 years of sales and marketing experience that will help when making a decision in selling houses. He tells Scott about the effect of the pandemic in the industry, what the future looks like, and how his company can help those who are interested in foreclosure auctions and listings in Texas.
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Everything You Need To Know About Texas Foreclosure Auction And Listings In Texas With Jack Zagunis From 4Closure.info
My name is Jack Zagunis with 4Closure.info. We are going to talk about what has been happening in 2020 with foreclosures and what the future looks like.
I’m excited to have our special guest. I get so many people that reach out to me regularly, “We are looking for distressed deals. We are looking for foreclosures. We are looking for note deals.” Texas is a big state. It’s a very popular state to invest with for a couple of reasons, not only that we have great values and stayed stable for the most part from the last recession but we are very friendly here if you are a lender and we also have the fastest foreclosure timeframe in the country. I’m honored to have Jack Zagunis join us from 4Closure.info or Foreclosure Listing Service for most of you that may have been around for a little while. I’m honored to have him on here to talk about what he has seen, the resources they have for investors out there. Jack, what’s up? It’s good to have you on the show.
I am so excited, Scott. Thanks for having me.
I’ve got started using FLS many years ago with George Roddy when he was starting with that stuff. For those that don’t know what it is, tell us about yourself and then talk about what that services.
The Foreclosure Listing Service has been in business since 1963, started up in Dallas doing the commercial listings. That was George Roddy Sr, who sadly passed away years ago. A company has upgraded a lot of its digital platforms. If you go on it, you are going to be able to see a street view of the property. You are going to be able to see bedrooms, bathrooms. It’s going to take the public data that you get. Anybody can get to the county courthouse. It’s usually 1 to 3 pages of the foreclosure notice. It’s going to take the legal description, pull the data from there and make it easy to read so the investor can quickly move through and say, “I want this property. I don’t want this property.” It’s going to cost you anywhere from $40 to $60 a month to be a member of each county. For some people, they are like, “I want to pull up myself.” That’s great. It’s totally fine. You can go to the county records. If that’s worth your time for us to do that for you, then we will be happy to do that for you.
It’s a big thing. There are a lot of information on that list. If you want to pull a three-page notice for every foreclosure or notice of foreclosure filing it gets on, especially here in Texas, it’s all about speed. Getting the notices out, if you are doing direct mail or reaching the borrowers because when do these lists start coming out? It’s not two months before.
I remember in Colorado, there was a 90-day notice back when I used to do real estate there. California, with all the delays that they have, it’s up to a year. Here in Texas, you get a minimum of 21 days’ notice. On the twentieth day, we have everything completed. It’s ready for you to start driving, door knocking, calling or at least preparing your title. It’s ready for auction.
It’s a speed thing. If you are going to go down into the county records, ready to do it all yourself. It’s undervaluing your time. As you said, you had 45 to 175 depending on the county. How many counties are you doing in Texas?
About 230, there are 254. We don’t have quite all of them yet.
Are you sending something down there? Do you have a resource? Plan information? How’s that working?
Yes, we do. We send people to the county courthouses to verify the records. Most of the records are online but sometimes they don’t get scanned quite right or got put in the wrong area. We do check the county records. I checked McLennan County, which is where I live, Waco, Texas and we send somebody out to the especially in more difficult counties where they can’t get it together to get them all online.
It’s probably more of the rural remote counties that aren’t up to date. They don’t get things done. The lists have been such a resource that I have used on the note side of things. A lot of people are using that for door-knocking, driving for dollars, sending out letters and postcards. I like using the list to find smaller banks or institutions that are getting ready to foreclose on a property and using that asset as a hot lead into either the attorney foreclosing or to the bank directly to try to buy that debt on that list of potential other deals that they may have in other counties or other states out there as well. It’s been a valuable thing. Let’s talk about that great info that’s on their besides that they have the property information, what else is on there?
The people have called me up to ask about what to do with the list. We do have a lot of different things that we do with our list but I haven’t heard anybody talking to banks directly either before or after the sale to try to work with the notes. That could be something that is not being utilized enough. If that’s your business, you don’t have a lot of competition as far as what I have heard on the phones in two years of working for this company.
I have done it for a long time. I would take the big list. I remember back when there would be 1,000 plus foreclosures in Bexar County, Dallas County or more in that. I would filter the list down to smaller institution banks, getting rid of the Deutsche Banks, the Bank of America, the Chase and the Citi because they are just too big and finding the Jefferson Banks. Some that are not too small, not individual one branch but the mid-size banks that are foreclosing. The fact that you’ve got the borrower’s information, you have the unpaid balance roughly when the loan was originated, the appraisal value of the property, and the attorney or the trustee handling the foreclosure. I would always look for a trustee that wasn’t the normal name because a lot of them are doing the same thing for different banks up there.
If you see a trustee that isn’t always on the list, there are usually about 3 or 4 trustees in every county that everybody knows. Some are not the norm. Those are the ones you go after.
Have you had anybody talk to you about how they have used a list to find private money as well?
If it’s a self-directed IRA investor or a private investor in LLC it can often be a great fund.
Let me learn something on this even though I’m the guest.
It all depends on who is foreclosing.
You can easily even bring that up and be like, “Nobody is paying you. I will pay you if you let me borrow some money for the next auction.”
“I see you’ve got this note. What do you want to do with it?” If you don’t want to foreclose and take the property back, often you believe in doing easy REO buy for the most part. A lot of people aren’t familiar with how to set a bid at the auction to get their assets sold.
You see somebody like John Doe. You could probably find them, especially in places like Waco.
On the different counties out there, you also have an asset been on the list for more than one month. You also have a common previous listing, yes or no?
I don’t know if you know this or not from tracking there in Waco where you are at or other places, are you seeing that a lot of those are starting to show back up regularly? It’s hard to tell because of COVID.
For those of you who don’t know what’s happened for foreclosures, this is my understanding of it. Back in March of 2020, there was the pandemic and the April list was already set. It happened on March 12th or 14th of 2020, everything shut down. The list was ready the week before that. April 2020 was the biggest list we have had in months. Things were starting to accelerate in the foreclosure world. The pandemic happened and they said, “Nobody can go outside.” They determined that real estate was an essential service. You can do foreclosure auctions where you can’t meet with eight or more people but it needs to have eight or more people to be a sale. It’s a confusing place. I went to the local courthouse. We saw the first sale in April. There was for sales in the April auction of 2020. There were three in Collin County. There were not very many anywhere.
All that being said, what we found out is that the order was in place so that not everybody is getting foreclosed, getting out in the streets and spreading COVID around other people. They had to limit it to the government-backed loans where the person is living in the home, which is 70% of all loans. It’s almost doubled. Foreclosures have continued every month, except for 3 or 4 counties in the state. They have continued every month in very small numbers. That’s the background of what has been going on right now with foreclosures and where they are at.
Before COVID, were you starting to see a general incline across bigger counties? If somebody is like, “We are going to have this apocalypse, this meltdown of everything happens.” Most people don’t realize that from our tracking and what we have learned is 1 out of 10 Americans is already 30 days late in their mortgage before COVID. There are still people that were losing their homes or foreclosing that weren’t paying. Talk a little about what you were expecting to see?
Here are the people now, they keep putting the backup sometimes because it seems like the moratorium is going to end and then it gets extended. There are the people that are going to get foreclosed on soon or all the people that we are going to get foreclosed on before the pandemic happened, they’ve got an extra year. They are the people who may be their property taxes have increased, their mortgage payments have increased and so they are going to probably get foreclosed on. Some people have lost their jobs since the pandemic, and then there are the people who have been on forbearance for a year on their payments. I don’t think anyone knows 100% what is going to happen when the forbearance is over.
There are these four major groups of people that are probably going to hit the market now. Are they going to hit all at the same time? I heard in Travis County in 2009, they did a three-month forbearance on foreclosures because there were these auto foreclosures happening. Not car foreclosures but automatic. In the month following that, there were 1,500 foreclosures in one month in Travis County alone. I don’t see that happening here. I don’t know if it will or not. Nobody knows for sure. I hear the banks are going to slow-release these over time. We do suspect that there will be 2 to 3 years full of foreclosures starting in late 2021.
It will be more of a dribble versus a full turn that faucet on. I don’t think anybody wants to do that.
It doesn’t help the banks so it doesn’t help anybody.
Nobody wants to be the bad guy after COVID. What we are going to see more than anything else is going to be the second home mortgages or there are investor loans where the actual borrowers on the mortgages, who have an investment property didn’t have the reserves and haven’t been receiving anything from the tenants in place.
Those are the people that are hurting the worst are the people that have 1 to 6 properties, they are mom-and-pop landlords and they weren’t getting rent. They didn’t have any good bailouts for them.
What you have been seeing each month? Is that fallen in the classification with that type of loan that you have seen dribble with a few foreclosures each month across it or is there any type of trends or track that you see?
In McLennan County, we double their number from last month. There are 25 and 12. We are seeing a lot of the private loans, HOA loans, Mechanic’s Liens going to sale. You see a loan that was taken out in 2020, then it’s being foreclosed on 2021. It’s only a year later because of one-year loans. In some HUD loans, usually, if the home is vacant, they are going as well.
Vacant homes or vacant HUD ones, those don’t fall in, if it’s occupied or somebody is living into it, “Let’s just go ahead and do business as normal,” the banks are on the hook for the most part. Are you seeing an increase in some commercial loans going to foreclosure versus just residential stuff?
I haven’t seen it yet. A lot of people are expecting it. People have got our list now for six months thinking it’s going to happen and it will happen. We do see some big buildings for sure but not like this huge uptick in office because everyone is working from home. People have been paying the restaurant and rents. That is something we expected to see by now but we haven’t seen a huge number of that yet.
Besides the state foreclosure list, you also offer a couple of different ones to go along with those. What are some of those lists that you also offer?
In our other lists, we have the results of the auction. We sent somebody to the auction to tell you what it opened for and what it eventually sold for if it went back to the bank or a third-party investor. We have the opposite of that list, which is the unsold list. About 75% in any county average don’t go up for auction. They get pulled. We sell a list of all the properties that were pulled. A lot of times, those are still possession to the homeowner so they are good to market after. We also sell the sheriff’s list, which is the same foreclosure process. These people are losing their homes to taxes and judgments instead of the mortgage, HOA or liens. We also have the post-bankruptcy alert list. This is a great list for people who are going to be in foreclosure in 3 to 6 months. They are losing their bankruptcy protection. It’s a good list to mail.
There’s no sale at the end of this one like there is with the other ones. You have to send a postcard or go knock on the door and start marketing yourself. We have some vacant homes, declared vacant from the US post office and one called likely to sell. The other thing we have and developed in the last few years is we wanted to be known as more than just a data company. We have auction financing. We will do the evictions for you if you need it done, quote out the construction job, will bid for you at the auction if you need it done. We will drive by the property and take pictures. It’s $10 a property. We will do the title search. We are expanding into all the different steps you need before and after the foreclosure. If you need the locks changed after you win a property, we can do that as well. Thanks for that plug.
If we get a list, we need photos were taken or title, we either pay for the full list or can we do a partial list or one-off even if people are looking for that or not or you guys have a minimum order on that?
Yes. Everything is à la carte. You need the list. You can get the list. If you just need photos, you can get photos. There’s no big package of everything. It’s all, “Here’s what you need. I will help you out.”
That’s a new feature. A lot of people have avoided that, especially those that are working full-time. They don’t have the time to go out and do a lot of due diligence.
There’s one guy, when I was in Tarrant County at the auction, he was yelling at me. There were only thirteen sales in Tarrant County. It was ridiculous. There were 90 properties and almost thirteen left. He’s telling me, “Not enough trustees are going. This isn’t worth my time.” Luckily, I was able to turn that for him and say, “I get it. I understand.” He looked like he was a successful businessman. I was, “If you make more money being at work and want us to bid for you on the steps, we will do it for a fee.” He could make more money staying at work that day and just telling us what properties he wanted for us to bid for him. All these other services are great. They are right for the right person, especially the auction financing. To get hard money loans on anything, you need to have an inspection on the property, at the very least, try by inspection. It needs to go through a title company. We found a way around that. We can finance the deal for you at the auction.
We need to dive a little bit more of that because, in Texas, you’ve got to have cash.
You can show up with our cashier’s checks. When you win the property, you can invest the title into our name and your name. When the title comes back in the mail, we will take out the first thing, deed of trust at that time and then you will be the sole owner of the property.
What kind of points cost goes along with that?
We have had it for about a year but it’s new to the industry. It’s typical hard money, I would say it’s a little high. Three points on the origination and 13% interest. It’s an 80/20 loan.
Somebody is bringing 20% to you.
As soon as you win the property, you are going to throw 20% in the fund. It’s like, “How do you know how much you are going to use, $100,000, $500,000 or what?”
Is that wired that same day, for the most part?
I believe so. I’m not usually involved in that step. It’s changed within this day or the day after.
It’s a good thing if you need fast financing to make that stuff happen. Come to the board with 80% financing. Everybody has their pick to what they want to bid at, their MAO. “I know my MAO is going to be this. We put 20% and you will finance the other 80% if it’s winning and If we don’t win, it then just a refund back or rewards back for the most part.
If you don’t win, I don’t think anything goes in because you don’t want your money until after the win.
Is that throughout Texas or specific counties? How’s that work?
To my understanding, it’s throughout Texas but we are going to drive those properties. We are going to run our own title on those properties before the auction. For one guy who has the money to buy at auction, he’s using us for that service because he’s new and he wants us to look over deals that he’s going to do. If we have skin in the game, we are going to look it over too.
That’s the biggest thing. I have been to many foreclosure auctions across the country. It’s always interesting seeing new people at an event. I was at an event in PG County a couple of years ago. There’s a second lien that was foreclosing. Most people weren’t bidding but this guy showed up in a suit. He bid 29 on this property. It was worth $150,000 not knowing it was a second lien. He was, “I can’t believe the books that take this works.” I’m like, “Do you know that’s a second lien. There’s $130,000 first lien.” He was like, “Oh shit.” That’s smart because you can’t add a lot of comfort level with something brand new. There are a second set of eyes, more experienced. A company has done thousands of deals to understand what makes sense. We have to spend some more time talking about that. When you guys working with so many investors, is there anything that stands out that you see that is creative in your list? Let’s talk about creative and let’s see the most common usage of your list.
We thought we might have an avatar, one type of person or a majority that buys our list. We found out through lots of calls to our members that there are a good amount of them only buy at auction. Some only buy before. Some tried both, but then some institutions use our list too. There are a lot of title companies that have access to our list to watch their properties that are in escrow. There are a lot of banks that are watching some of their loans on properties. There are a lot of attorneys that are using our list to help people declare bankruptcy.
Some realtors are looking for a listing, the hidden secret with the list, I have never done this and I don’t fully understand how to do this but the people I have talked to seem like they are doing well is a strategy called chasing overages. It’s, you get the struck-off list or what we call The Results List on our website, you find out exactly if it went to a third party, how much more over the estimated balance or the opening bid? That money is owed back to the homeowner but I guess it’s hard for the homeowner to collect on that and so they connect the two. They must take a large fee because the people that follow me are using it for that purpose. They seem to be doing well. I can’t give them advice on it because I have never done it. There are some YouTube videos I noticed about tutorials on how to do that.
What happens are a lot of times we collected quite a bit of overage, especially taxes still takes place, maybe only $5,000 is owed on the back taxes and take its bid up to $50,000. That first $5,000 goes back to the county. There are $45,000 sitting at the county to the next lien holder on the property, whether it’s a 1st or 2nd holder. We have been able to use the struck-off list in some cases to find overages that we were owed or bought notes from the banks and institutions who didn’t know there was an overage by saying, “This one is a foreclosure. They sell it to us for pennies on the dollar.” They didn’t do this research knowing that there are $50,000, $60,000 or $10,000 out there for them to claim. Are you using the tax sale stuff and financing tax sales team for people or just on the traditional foreclosure side?
No. We just provide the list. We don’t do the struck-off list for the tax sale at this time and we also don’t finance those taxes. They do have a right of redemption in taxes. In other states, I’m sure that even the trustee list probably has a right of redemption. That makes it a little too risky for our lending.
Some people are using insurance. You’ve got redemption periods and a flat rate, plus, there are often liens behind the property or the taxes as well. They don’t clear up. Whereas in the foreclosure list, you are in the first lien position, you are in the driver’s seat most part besides the taxes.
We do offer to bid for people at the tax sale. We will do that. We won’t put our money up. We won’t stand there and watch a little sale, take notes on what sold and for how much, which is what we have to do.
With different counties, are there counties out there that you are, “I want to spend a lot more time researching that county or seeing the market?” I know that the USA Today came out with an article before COVID like, Hays County, down in San Marcos was one of the fastest-growing counties in the country. We all know that Comal County is doing well and New Braunfels too. You guys are there and they are just booming like crazy as well too. What are some of the unheard counties that you have seen some activity in?
I get that question every day and unfortunately, there’s none anymore. We used to direct people to Denton. It is flooded. We talked about Bell in the past. Bell is going close too. Everything is super competitive. Hays County, Awesome County, two foreclosures. There’s no hidden gem out there right now in my opinion. I believe Harris County is going to start its foreclosures again. There are probably 600 or 700 properties on the list. They haven’t had an auction since March of 2020. That may be a place that you can do something. I hear it’s crazy over there. They used to be quiet counties but they will be again.
For those that don’t know Bell County, it’s a working temple. It’s on I-35. You will see occasionally some stuff there. You are talking about Hays County, South, that’s where Marcus Texas State University, one of the biggest universities in the State of Texas, where my alma mater. Harris County, that’s Houston. It has been hit. It’s the largest county in the state. You had the flooding, hurricanes, people were delayed from that foreclosure night and yet COVID kicking in. Six hundred foreclosures set. How many make it to that, get pushed back or kicked off the list? I might have to follow back up with you to see that number if you know the numbers on it for the most part.
We don’t attend the Harris County auction. That’s the only knowing what you know, what sold is to have someone there. You would need 8 to 12 people there to properly monitor all the sales because, in Harris County, they don’t wait their turn. They have six trustees going at a time.
You have just got to have a crier to get on the courthouse steps and start talking in front of people listen to. I have never been to a county foreclosure here in Texas. It is an interesting thing. They don’t want to wait until 4:00 PM. They want to be done by 11:00.
I think everybody should go at least once, first Tuesday to your local courthouse. There are millions of dollars in everyone’s pockets, in cashier’s checks and cash. Everyone is standing around, waiting for people to show up. No idea when they are going to come.
It’s a great place. I have always said to go and race. Meet with private investors and raise some capital. In Texas, we are going to have cashier’s checks. They have hundreds of thousands if not millions of dollars in denominations in cashiers because they’ve got to present that almost immediately.
If you are an investor, you’ve got to go even if you notice in foreclosures to meet people. That’s how I’ve got my first job in Texas. I was door-knocking all the foreclosures. I didn’t know what I was going to do with it. I go to the auction. I’ve got all these notes. The guy who I ended up working with for a long time, a mentor and friend noticed that I was there and we have just got to talking. It’s almost like a little hangout spot too.
Next, the beautiful thing is, the Lone Star State was active. Dallas is picketing on the top markets that would be distressed off for investment. It has been a hot market for years. Austin, very hot here but we don’t see it much in distressed debt because everything is overpriced and the demand is so low. Harris Dallas started seeing an uptick in short sales, a little bit before COVID. It’s just interesting to see what’s going on here all across. It’s amazing that you guys have such a big staff and are covering so much of the state, that first Tuesday. There are such a wealth of resources there. What’s the best website for people to go to take a look at the list you offer, to pick up the list and how’s that going to work?
Our website is 4Closure.info. We’ve got some webinars on YouTube as well that we are teaching people. There are a lot of free webinars there. If you go on our website, you can join for free. If you join for free, you get 20% off any county’s list, never have to put in a credit card and never expires. Let’s say if it’s Hays County, you might not see a single thing this month but let’s say if it’s Harris County, you might get to look at 170 to 200 properties, all the information, all the details on them to see if it’s for you. We won’t harass you. You can stay on. Get the emails from us, teaching you about foreclosures. Eventually one day, you will come on and be a full member.
It’s a valuable thing. It’s a list that I have used for years. People are always looking into it. When we were exchanging emails back and forth, things were coming to an end where the government putting them down. This is a viable thing. Texas has always got a hot market with everything going on here for us. Some counties have done well, some counties have not done well. Like you said, some big numbers and others, nothing and others as well too for you. You are investing in Texas or looking to invest in Texas, 4Closure.info would be a great place for you to start looking at what’s taking place in the markets, counties, cities that you are interested in. It’s inexpensive to pick up the list. As you have read here, they do a lot more besides just data. They can help you with bidding, with some of the financing, struck-off list, BK list, a wealth of information. That’s why we want to have Jack on here, to talk about their services. Jack, thank you so much for coming to the show. I’m looking forward to connecting with you some more shortly. Any other ways for people to connect with you besides the website?
We have a Facebook page as well. You are welcome to follow us on Facebook, which is where we will post things that you might need to know about certain counties being closed or if their auction location moves. That’s where we put our bulletins out. Find it by Google searching Foreclosure Listing Service Facebook. Put those four words in there. Same with the YouTube. Were the first ones that pop up on each of those searches in Google.
Jack, thanks so much for being a guest on the show. I appreciate it.
Take the opportunity. Go, check out the website. You can download a sample list. You can see what’s all in it for you via PDF and then also Excel. It’s such a great tool. I have been using their lists for years when we have been targeting options as we started seeing a spike in Bexar County, Travis County, Dallas County, Harris County. It’s so valuable info, whether you are looking to chase foreclosures, REOs, nonperforming notes, looking for funding. We are looking to get your foot in the door for other deals. That’s a great place to get started, valuable and affordable for you. Go out. Take some action. We will see you on the top.
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About Jack Zagunis
Jack got his RE license in 2013. Since then he has served as a buyer for several large real estate investment companies. Lately, he has worked for Foreclosure Listing Service for 2 years as a Customer Sucess Manager. He and his wife enjoy one duplex they own which is rented as an Airbnb on one side and a long-term rental.
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