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Northern Virginia Foreclosures

I’s that easy. At least that is what the speaker said at the “How to Make Money in Foreclosures” seminar offered in Northern Virginia this weekend. Whipping out a twenty dollar bill and asking for a ten in exchange he began to explain if you are decisive you can make money in today’s foreclosure market. Of course to understand how to do that you need to part with your own hard earned money and come to the BIG THREE DAY seminar that would give you all the details of their great program. Today we will tell you all the great stories of how other people just like you made thousands of dollars on flipping foreclosures.

First all the title of the seminar is wrong as it focuses on acquiring pre-foreclosure properties not foreclosure properties. There is a difference. A pre-foreclosure property is one where the mortgage holder has given notice to the homeowner that if they don’t catch up on their over due mortgage payments in the next 90 days then they will take the house from them. A foreclosure property is one where the mortgage holder has already taken the house back from the owner and is now looking to sell.

northern viginia foreclosures The seminars suggest you buy a property that has just had the pre-foreclosure notice announced (via courthouse records or online services) make an offer to purchase the property, assign the contract and then sell it before the hammer falls from the bank or auction company. They suggest that you get the owner to sign a quit claim deed over to you and then you flip the property for market value.

Not mentioned during the seminar are that most loans made in the last 5 years have a “due on sale clause” so when the current owner signs the deed over you have to be able to come up your own mortgage on the property and if the property was purchased within the last three years the amount owed may be more than today’s current market value.

northern virginia foreclosures Looking around a room full of people you could see the some of them being sucked in to the get quick rich mentality being touted. This is the same mentality that many of the owners of homes now in foreclosure had. Instead they own a home they can’t sell and have ruined their credit for the next 10 years. Don’t get sucked into thinking that the foreclosure market is the next get rich quick scheme. If you want to invest in real estate then talk to a financial advisor, an agent and an attorney about the right way to invest in real estate.

This isn’t the market for FIND ITFUND ITFLIP IT*

Posted by Cindy Jones-Northern Virginia Real Estate & Military Relocation Services on 12/02/2007 10:56 AM

Comments (31)

northern va real estate, fairfax county real estate, cindy jones, foreclosures

This post has been included in Virginia Information
Post is included in group: Virginia Foreclosures Short Sales and REO (and Pre-Foreclosures)

31 Comments on *GET RICH QUICK*PURCHASE FORECLOSURE PROPERTIES TODAY*

DEC

2007

YAY Cindy! Thanks for doing your part in educating the masses! We have three auctions in the next 8 days. THousands are looking at those 600 auction properties, the great agents are showing them where the hidden gems are. The great agents are also telling them "this isn't the market for find it, fund it and flip it" as you say. This is the market for REAL investors who are prepared for long term holds and renting out the place. THOSE will be the successful investors.

Our REO market sees absorption of half the entire market so people also need to back away from the notion that they are going to get something pennies on the dollar

Now everyone, back away from the infomercials :wink:

Cindy- Very scary seminar. Most armature's get the deed signed over, and the property foreclosures before they can sell it. If wealth is the objective, buy REO's (They are a better deal than Pre-foreclosures) rent them until the market appreciates and then sell. But, everyone is out for the get rich quick schemes.

Cindy,

I have had two people mention this to me recently. Actually they were asking about it and wondering if this were a good way to get a cheap house. Just the word "foreclosure" conjurs up images of a $100 home! The dip and flip days are over. However, that is not to say there aren't some "better" deals out there than a couple of years ago. It's like the Stock Market, long term pays better.

I think there is money to be made (even short term) in the area of pre-foreclosures and foreclosures, BUT . . .

Something these get rich quick "gurus" often fail to address, is how to "flip" that home at market value? If it was that easy to quickly "flip", the homeowner would just sell it for a fair price to begin with! Working with investors, requires not only finding them a great deal (which are certainly out there), but caution in educating them as to the reality of how long that property may take to sell and at what price (usually below market for a quicker sale).

And, there's nothing "quick" nor "easy" about pre-foreclosures!

As expressed by several others, those with a long-term approach will invariably triumph over the "get rich quick mentality".

Cindy, I have to agree with you in theory...However, if you are dilligent enough to do the research to find the 2 out of 10 homes that are in pre-foreclosure with a bit of equity in them, you will be able to do OK. Are they out there, statistics say yes. Will over 70% of those available homes go to auction due to inaction by the home owner?? Yes again. There are a few companies(mine included) that really do buy houses, catch up payments, and share a bit of the equity back with the seller. However, it has been my experience that sellers will ride the house all the way to the auction date with an inexperienced agent who tells them to hold out until the last second. It is becoming easier, and cheaper, to wait until the lender has cleared all leins and titlle, and then just buy it for less, all cleaned up.

Get rich quick?? NOt hardly, but the deals are certainly there if you have a team set up to do the footwork. We are buying and holding with our investors now, and are increasing our exposure every month as more properties hit auctions.

Cindy, there are so many people out there who think they can "get rich quick." How many hundreds attended this seminar? Real estate is a great path to wealth, but doing it right means a get wealthy slowly mentality -- not a find it and flip it one.

Cindy - The term "flip" is inappropriately used by many people including the media with programs on TV such as "flip this house" Most people who "flip" houses successfully add value to the house by doing renovations and or improvements to the property, they are not true flippers. A true flipper buys a property and resells it for more with out doing anything except perhaps a major clean up that takes no more than 1 or 2 days. A lot of people could get sucked in and lose their shirts by the get rich quick Gurus.

Mike Norvell makes a very valid point in his comments above about owners riding it to the foreclosure point but I would disagree with his statement that it is the bad advise of of an inexperienced agent that gets them to that point.

Cindy, I have yet to see a pre or post foreclosure property on the market at or near its market value. Of course, that's a pretty small sample, but it seems that even with the wolf at the front door, people are having a hard time getting realistic.

So, maybe someone looking for a buy and hold situation could find something worth it. That way, they have a chance of getting rich slow - probably the best approach!

Renee-the mega auctions here have not yielded to many actual closings. I've been following some of the homes from our last one and only TWO have actually gone to closing. Not a great percentage. I'd be interested in knowing if yours do any better.

Mark-with the average days on the market well over 90 in our area you don't have a lot of time to get the property sold at the significant property they were projecting in this seminar.

Mike-I think experienced investors and investment groups can make money in any market. I'm glad to hear that you are working with a positive program that can help some homeowners in this market. I think it is a buy and hold market and the get rich quick schemes just suck the money out of the unsuspecting.

Patricia-I'm part of the get rich slow...very very slow...group. I own rental properties and will if I find the right deal try and buy another but it won't be to "flip" it. I did it just once in the hay day of the market and it was so nerve racking that I don't ever want to lose that much sleep again!

Cindy,

I hear you loud and clear! I wish more investors could understand the process as well. The old, "Get rich quick" schemes are still around. The ones making money are the ones giving these classes, so we're likely to see much more of it as the markets get better. We really need to be educating our clients, as you did so well here. Great post.

Trent-correct if homes were selling even if it is at a lower value than the banks wouldn't be dealing with foreclosures but "short sales" instead.

Andrew-if you are an investor and want to talk about long term strategies and 1031 exchanges then by all means jump into the market. You are right. The seminar leaders are making money!

DEC

2007

Cindy, thanks.

Yes, everyone talks about "foreclosure" today. But most of them don't know the difference between "pre-foreclosure" and "OREO." Will they listen to your advice? I doubt too.

As I know, the most difficult way to make money in a distressed housing market is the one those gurus promote. That is a property under "NOD" thru "NTS." Not only you need a lot of guts and knowledge in yourself, but also a lot of luck and facilities from others. It is a field needs "perfect" expertise from a SAVVY investor. It is a jungle, absolutely not for the general public. But in practice, no savvy investor will like and work on it intentionally, except some lucky situations happen on his way.

It is really so tough and difficult a job that a seasoned investor like me don't even like to spend my time on. In Cali, doing that can easily get you into a crime behavior if there is a little bit step out of the state regulations to protect a distressed owner. If it is so easy, why those gurus sit there and talk? They will have no time when busy in digging out their wealth, right?

Yes, there is a "quick rich" program to get you quick return and financial freedom. But not those guys'. With more than 15 years of experience, I have developed my own program that I call it "American Poor Folk's Egold" in my group or my bog here. It is super safe and with little money involved. You can check, review and critcize the ideas and investment goals. It is free and full of real cases I did when I write my article.

I want to give away free my experience to help our poor folks as my retirement hobby. I have no plan to sell it though.

BTW, there are so many agents who are used to "dumb chat" too. I regret to say that they don't know how to swim, while working in a swimming pool facility. Wake up, you are a self-employee, not having a 9-5 one.

We get so many calls from "investors" on our REO properties that are told things like this or are in a group. They don't believe us when we tell them it doesn't work that way. It's too bad as there are opportunities out there, just not get rich quick ones.

Cindy,

Solid advice for would-be foreclosure investors. It isn't nearly as simple as these seminar people make it to be. Basically, the only ones who make real money in this are the seminar promoters, as has been the case for so long.

Now if only the people who are getting suckered into believing this is the way to make money could read this post! Discuss it all we like, and know we are right about the way it really works, but who will the buyers/investors believe? They have probably spent a lot of money on the seminars or information they bought, so th people who sell that are seen as the professionals and the authorities. We are lowly Realtors who are trying to make a sale at all costs, so we will say anything... Or that's how the public perceives us.

Yeah, people are making a lot of money "fliiping" or rehabbing and selling distressed properties. But in most of the cases I have seen, what is made is good money, but far short of what the average seller thinks he is going to make. Most people don't understand the process of REO listing. After a few BPOs and possibly an appraisal, most of these properties are listed at or near market value, given their condition and current market. Some of these seminars and infomercials lead people to think that they get prices at what is still owed against them, so the best deals are ones where the property has been owned several years and there is more equity. That may be true on the courthouse steps, when you haven't been abletoget inside and inspect a property and you are buying all title defects, etc, but it isn't true after the bank owns the house. You may get lucky and find one at a decent price that the bank is motivated to get rid of more quickly (end of month/year closings are really pushed for).

I havesaid it before and will keep saying it until I either get sick of hearing it or people start to learn.... The BEST way to find the good deals, foreclosure or otherwise, is to work with an agent who specializes in REO or investment properties! You think I only watch those that I am listing? Heck no! I watch EVERY trustee's sale published in the area. I watch every property that I see a pre-foreclosure BPO on. I Watch every REO that gets listed with the other agents around. Most of the agents who specialize in these properties do the same things. We know our market and these are things we are eager to use to help our buyers/investors/clients. AND, we don't make you sit through an all-day seminar or pay lots of money to get information. We may need (according to our state laws) a written buyers' agency agreement to advise or provide such info, but it is part of our job. It is the gamble we take all the time in the hopes of it generating some sales. So if you are interested in investment properties or REO, see who handles them in your area and contact that agent for accurate information. Save the money you would have spent on the seminars or the programs touted in late-night infomercials, and use it for paint and other rehab supplies...

Cindy: Amen! While there may be some value left in a select few homes, the get-rich-quick-schemes of property flipping are quite a gamble these days! :) Thank you for speaking the truth!

Amber,

It sounds to me that there is only one breed in the world that knows REO or distressed market: REO listing agents.

If that's true, how come those agents are NOT making a lot of fortune (Yes, I do know some are making money through their investor group by "inside trading")? Yes, I do know their fiduciary duty to a seller limits their opportunity (It could be "double escrow." that is an illegal one, not a legitmate one). Excuse me to ask a question: are you making some money enough or can say that I am able to quite my current job to NOT worry about tomorrow? Because you are confident that you own a skill to easily make money in RE.

In 5 years, I have never really worked. In the past 2 years, I only used my credit card to purchase REO's without help from an agent. I am willing to open my NET ASSET record for you and I believe you will say: "How did you do it?" Because you can't deny my net worth in paper grows Ten times more than my seed money I got from credit cards. In real terms (that means If I sold my current properties for"quick sale" at 40-50% off market price), you will say I have at least 300% return in 2 years.

Common, give me a break!

Please don't just look at this trade field and feel content. We really are in a better position to have financial independence than other so-called " investors" because we are inside the field everyday and have "marketing edge" to better be a winner. But just like I said, a commission-oriented agent goes no where.

p.s. I really hate to use "investor" to present myself since it is a so notorious term caused by those RE Gurus. I introduce myself by "retired. But I am interested in buying and selling houses."

Ed-thanks for your perspective and your personal experience. Across the country there are different opportunities in the REO market. WIth the high price of homes in Northern Virginia most of the banks are still trying to set their prices above what any investor wants to pay and even more than a buyer looking for a home to live in. Finding homes that are a deal that would fall into your criteria is much more difficult than in other distressed markets.

With that said agents who are selling REO properties are not necessarily investors. They are accepting listings and the financial responsibility for those listings (paying up front fees to contractors, locksmiths and more) in order to move the property. It isn't a fun business to be in and Amber is obviously doing more than many agents who work with REO listings are. So many in my area are just slapping the listing in the MLS and have dozens if not 100 listings. They may have no idea of what is going on in the area. I commend her for going the extra mile to know what is happening in her market.

Cindy,

I am with you. As I said in my blog, "mortgage is world-wide business, real estate is almost purely local business." Even with some retirement fund, I don't think I can live there easily and there is no fun to do real estate investing. That's the reason why I moved to Texas where is a good market for me to have fun and play E-gold games. I used to live in Crytal city when I had a job in D. C. But I don't know anything about RE in your state. As I know, your next state NC and SC are good places to play Egold game too.

I respect other's right to make choice. They are responsible for what they have done as people said "you are what you eat" in diet business.

There is a saying that "Men go high, water go low." I would like to say that any one who wants to be rich has to know where money goes. Don't just listen to those guru's speech which is totally B. B to sell "hope or dream" and take money away from the poors.

Go to where money goes? We have to know one of the intrinsic tendency of money: they go "HOT." In order to make money, a poor folk is not so lucky as Dahbai's sovereign on whose door Citi bank knocked last week. A poor folk has to realize that with, inferior financial position, he has to go out and look wisely to find a opportunity to get money. They needs workable plan, sacrifice, and discipline to follow through the plan and get job done as he planned. I know it is not easy for some people. But really that's their choice.

Some listing agents are like a dumb duck, idly sitting on MLS. I agree with you that Amber is obviously a good listing agent, doing her TLC service and with love to the publics. My best wishes to both of you.

Cindy -Good post about this subject. I have clients who I have filed Bankruptcy for (some are RE agents) that thought they could do this because they went to a seminar and some Investor spoke about how easy it is. Hard lessons learned by so many folks after the fact. Homes are "long term" investments. I tell people that over and over. Great time to buy a home and hold it and be able to afford it without being house poor.

Stella-if you want to have some fun on a cold windy day take a look at some of the REO listings in our area. I wrote a blog before about one agent that had called me about to lose four properties to foreclosure and I unearthed another agent (top producer no less) who has 8 properties that I could find that were listed as foreclosures. I'm sure there are others who got sucked in to the market and didn't think about the cycles.

Yea. I filed a bankruptcy for an agent that had 13 properties. What a waste of money on down payments, closing etc. that came out of pocket. Agent lost about $600K in out of pocket expenses. There are others. I feel bad about it but too late to really do anything. Damage is done.

Those agents are victims of the book "Nothing Down", I suppose. I saw a lot of agents were eaten by aligators (negative cash flow) in Cali. A lady agent who came out of a #1 university went into insanity when she lost 9 properties in Orange County, CA. I really don't understand why there is a chain reaction like a domino scenario from the 1st one down to the 9th. Don't they know a non-recourse loan and set up a losing point somewhere?

However, it is really not Robert's fault. Why those agents just read his book without a brain?

DEC

2007

Ed, I never said that REO agents are the ONLY ones who know how to find distressed properties. My post was not targettes as much at other REO agents or investors, but more at the wannabes, those who are inclined to think they have to attend a seminar or pay for some program teling them how to find properties, how much to pay, what to do to get them ready to sell, and how much money they will makedoing so. I am glad that you are making good money without having to work hard, but the truth is, most people who are trying to buy properties to flip, DON'T have the necessary knowledge to do so. A seminar is great, but I am willing to bet the same people travel all over the country teaching the same program, no matter what type of market area they are visiting. That is deceptive. What works in, say, Los Angeles, will NOT work here in the Ozarks. The potential earnings here will NOT equal the potential in other markets. How do I know this? Because I know my market! I see what homes areselling for, I can estimate repair costs fairly well, and know what a rehabbed home is likely to sell or rent for in my area. Presenting one program to peole in dozens of different markets is deceptive, because it won't work the same everywhere.

That is why I say, for people who want to start investing in real estate, or just wantto find a bargain, the best bet is to work with an agent who knows these properties AND the area. You won't be successful without knowledge of both, or without working with someone who understands both...

Amber,

I agree with you as I said: "Real estate is almost purely a local business." I am with you that most of gurus are selling "hope" as those selling cosmetics to a lady in their words "to help reduce winkle" (Be careful, it is said "help", no guarantee to make your wrinkle disappear permanently.)

There were so many trading groups, such as 10 biggest trading groups in Japan 30 years ago. Where are they now? Nobody needs their service in the cyberspace. Kmart can do business DIRECTLY with a foreign manufactures, such a term "OEM" came out a few years ago. Those middle men were cut out and disappeared in international planet.

With right knowledge, no one needs an agent. I am so sorry to say that. Since Cyberspace age arrived here, we are able to collect needed information to do our own right business with a calculated risk in RE. If the general public know the tricks, could our RE brokerage channel will follow the suit of those big trading groups who used to dominate international trade?

Since the "If" mentioned above is a real big "IF," maybe the established conventioal agent system still can survive for some times. But, it is very clear for us to see new marketing channel is emerging to challenge almost everything, such as Ebay. We are not immunized. Can we be safe to say our RE brokerage system is safe from the product life cycle as economists defined. I don't know.

But I am with you that most of average people are buying useless program to satisfy their "hope" and pacify themselves. They are not an actor or a real pro investor, let alone using their brian power.

Hope the big "IF" is not a real thing. But I am really doubting how an agent can well prepare himself or herself to cope with the future shock brought out by the challenges from a "transition" to easily survive our industry. Are we going to stay intact in the current stage having a very uneasy life and not so much bread to bring home while facing fierce competition?

You tell me. It is your life.

Ed- I appreciate your comments but don't want this post to turn into a debate about the value of agents in any market current or future.. That wasn't the point of this post but instead to tell consumers to be careful about get rich quick schemes.

Thank you.

You have a good point in your post that I agree has to be addressed And you did it well so far. Hope your points get across to reach the general publics.

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