Foreclosure myths

There are many common myths about foreclosures.  Some of them come from late-night infomercials and some of them come from people who are interested in selling advertising space instead of providing facts.  The myths are outlined in my book, and here are some of the common myths:

Myth:

All foreclosures are a steal.

Truth:

Lenders and their investors have a good idea of what a property is worth.  Granted, some of them are interested in selling property at a steep discount so they can meet their liquidity needs, but the discount is often built into the list price you see by the time it hits the market.  You will often find better deals by looking in an area with lots of foreclosures, but not necessarily with a bank-owned property.

Myth:

All foreclosures are damaged and need work.

Truth:

Not all foreclosures are damaged.  Many former owners cooperate with the lender when they realize they cannot keep their home and leave the place in good condition.  Lenders will usually try to negotiate “cash for keys” if the owner will leave the property in good condition.

Myth:

Making money investing in foreclosures is easy.

Truth:

It’s not as easy as it says on the TV commercial.  Yes, there are many people who have successfully made big money investing in foreclosures.  The question I always ask is, “If this person made so much money investing in foreclosures, why are they putting so much effort into selling an information product for three easy payments of $29.95?”

The best investors I know are spending their money on pre-foreclosures and short sales right now.  Check back periodically for updates on those investment strategies.   You can direct specific questions to info@mangledmortgage.com for a quick response.