Rumor Control--Foreclosures

A few weeks ago, I wrote a blog entry on the basics of the foreclosure process. With so much in the media about foreclosures almost every day, people have a lot of questions about foreclosures and how they work.

In addition to sharing this information, I would also like to help put an end to the rumors that buying foreclosures is an easy way to make money and get deals in real estate. It is possible to get deals and make money, but it is definitely not EASY, and there are many many pitfalls to watch out for.

I worked in foreclosures for about seven years throughout the 1990s, so let me share some tips and information from my experiences.

First, there are not that many foreclosures in the more desirable neighborhoods of Oakland and Berkeley. In fact, most of the East Bay foreclosures are in cities like Antioch and East Oakland, so finding a foreclosure that you might like will be difficult from the get go.

Second, buying foreclosures on the courthouse steps can be a tricky business. First, the bank wants to get their money back, so the opening bids may not be as low as you would hope. They will also require buyers with all cash. Plus, there are some very experienced players there who know how to game the system to their advantage. Buyer beware!

Third, it is very, very difficult to know the condition of the house in foreclosure that you are buying, since you probably won't be able to go inside before you buy it. It could be a neglected property in disrepair, or the person losing his or her home might be upset and cause intentional damage. Also, make sure you know exactly which deed of trust you are buying.

If you are looking for deals in foreclosures, it is probably best to wait until the bank has to sell it on the open market. At that point, the banks might be willing to make a deal. After all, they are not in the homeowning business. But, bear in mind that the sales will likely be on an "as is" basis and excellent credit is necessary.

I said it before and I will say it again--foreclosures are a tricky business. If you have any questions about buying foreclosures, let me know. I am always happy to help. I can be reached at 510-547-5970 x57 or MSmartt@jps.net.