Upcoming Foreclosures

How do people profit from foreclosures?

I understand the concept, buy low, sell high. What I don't understand is why a home will go for sale for 50 grand in a neighborhood where the average house sells for 300 grand, just because the owner owes 50 grand. Why doesn't the owner list the house for 100 grand so it sells right away, pay off the loan, and walk away with a profit?

Public Comments

1. Yeah, I know, it sure doesn't make sense does it? This is literally the stupidest rules built in the system. I am not a real estate agent, but from what I've heard talking to real estate fraud lawyers and bankers, this whole industry (especially in today's state) is seriously the worst of the analogy "left hand doesn't know what right hand is doing". The facts (rules) are, that the owner CANNOT list the house for sale at a loss UNLESS the bank approves it (since the bank gave the loan, it can decide whether they can forgive it). The "owner" technically doesn't own a house until it's paid off. Usually, if a foreclosure can be settled that easily, by short selling, banks will either allow the short sale (if they need the money), or wait and let the house fall (so they can sell it again, and profit more). Foreclosure is an inevitable product of housing bubble and hype. It's a good opportunity for people who've worked hard and saved money to profit from people who did not do their homework.
2. Here's the real deal.... 1. People in foreclosure are usually procrastinators, meaning they don't realize what predicament they are in until the auction date is set. So, if the homeowner has equity... they can "try" to sell it fast by lowering the price BUT they don't have the resources. 2. Most people who are making profits from foreclosures are doing it one of 3 ways. - Pre-foreclosure: homeowner is behind on payments - wants to avoid a foreclosure on there credit. They will "short sale" the property to an end buyer. The investor will make "equity out of thin air" by negotiating with the bank (this is an art/skill). - auction/trustee sale: some investors will buy the properties at the court steps. The banks will sell the properties at a discount because they do not want to hold on to the properties. If banks foreclouses they have to hold on to the amount of the loan as a reserve instead of selling it at a huge discount and lending the money back out (fractional reserve banking). - buying bank owed properties (REO) - it got to a point where no one bought the house - now the bank is the owner and needs to sell fast. Just like anything... when you want something to be sold fast, you drop the price. The concept in this business to make a profit is... buy really really low and sell low. Also keep in mind, people are emotionally attached to there properties and cannot make rational decisions until it is too late.
3. most all those ads are bait. It just does not happen in real life. If the buys were so great every investor would be buying those up long before anyone even knew about it