This is such an appropriate story for this site’s first post. It is a textbook case of what could happen when a prospective real estate purchaser does not do all his homework on the property he is looking to buy. Gus Armenakis of Coconut Creek didn’t pay for a title search but instead did his own due diligence on a four-bedroom Parkland home and determined it had only one mortgage worth $90,500:
Armenakis, a 38-year-old doctor, logged in to the Broward County foreclosure auction website and spent six figures on what he thought was a bargain-priced four-bedroom home in Parkland. It turned out to be a worthless junior lien. The lender, Wells Fargo, still had a first mortgage worth $386,593 [on the property].
Armenakis filed an objection to the sale, which was denied by a Broward judge. Wells Fargo filed to foreclose, and the auction was scheduled for Wednesday. “It might be legal, but ethically it’s not right,” Armenakis said last month. Wells Fargo apparently agreed because the lender gave him his money back. Armenakis cashed the $102,600 check on Friday. Novice investors routinely make the same mistake Armenakis made and they don’t typically get their money back, auction officials say. (Source: http://weblogs.sun-sentinel.com/business/realestate/housekeys/blog/2011/05/wells_fargo_returns_102600_to.html)
Jason Menke, a spokesman for Wells Fargo, said in a statement: “Bidding on properties at foreclosure auction is a very different process from a standard home purchase. As with any real estate transaction, prospective buyers should carefully research the property before the sale to fully understand what they are bidding on.” For sure, Armenakis learned his lesson from that nightmare situation and, if he had to do it again, would have sought out professionals skilled at researching title and lien information… Knowledge is power; knowledge is peace of mind.