An article in the latest Real Deal looks at the recent rash of classes and seminars that teach people about buying properties in foreclosure (apparently even The Donald’s gotten in on the act by marketing a course with an ad that reads “If you’re not a millionaire by December 2008, you didn’t attend my foreclosure workshop”) and finds that investing in foreclosures isn’t all that simple—and (no shock here) it’s certainly not guaranteed to turn you a quick profit. Rick Sharga, a foreclosure expert at RealtyTrac, says that if you’re eyeing neighborhoods with more and more properties in pre-foreclosure (aka “lis pendens”) where values are depreciating—East New York, say—the challenge is to find a property entering foreclosure that has equity…People may have overextended themselves and got involved with very risky financing, and there may not be any equity. In fact, the price of the property over the ensuing period may even be a negative equity situation.” Most foreclosure-investment experts say the best way to make money is to look around for pre-auction foreclosure listings (a property usually goes into lis pending a year before it actually makes it to auction) and try to negotiate a bargain price with either the owner or, if a bank has taken control of the house, the lender. Caveat emptor, though: “This is not about getting rich overnight,” says Jessica Davis, who runs a foreclosure listing service.
Sniffing Out Deals Headed to Foreclosure [TRD]
Graphic from RealtyTrac.