This morning in one of those can’t sleep moments I turned on the TV and the latest infomercial on how to make a fortunate buying foreclosures was running. It was one of the many that the unsuspecting public hears everyday. The premise in all of them is the same. Approach a homeowner facing foreclosure and save them by buying their home for what they owe. To make them feel better about their financial situation tell them “you aren’t in foreclosure your house is.” Then you can turn around and sell the home and pocket an enormous sum of money in 30 days.
Anyone who has worked with a “pre-foreclosure” knows what is owed on the property is often more than the current market value of the property. So the idea that you can walk away a short time later with a profit is simply ludicrous. Second if the home is in “pre-foreclosure” in order to buy it at less than owed is called a short sale and it requires lender approval. The property is not being sold for pennies on the dollar but at today’s market value. There is no huge profit waiting for you when you lock up the property and there isn’t another buyer you can assign the contract to, the bank won’t allow it.
Now I’m all for anyone who wants to make money in this market. I’m an investor and am on the lookout for properties that would bring positive cash flow as an investment and a positive return on my money in the long term. In today’s market this is the strategy that is going to make buyers millionaires. It won’t happen overnight and it won’t happen in a year. It happens one property at the time over period of time. It is a strategy that involves finding a good value in an area where you want to live in or where you can see a positive cash flow as a rental property.The infomercial gurus aren’t getting rich flipping properties in today’s market. They are getting rich selling books and workshops. Don’t be misled about how to make money in buying foreclosures. Talk to an agent who is in the trenches in your area. Talk to a financial advisor or an accountant. Don’t buy into the infomercial hype. You could end up being the next homeowner facing foreclosure and when your house is in foreclosure you are too!