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Another Get Rich Quick Scheme Hits the Airwaves

Foreclosures Aren't a Get Rich Quick Scheme That's right you saw it here first. This morning in one of those can't sleep moments I turned on the TV and the latest infomercial on how to make a fortunate buying foreclosures was running. It was one of the many that the unsuspecting public hears everyday. The premise in all of them is the same. Approach a homeowner facing foreclosure and save them by buying their home for what they owe. Then you can turn around and sell the home and pocket an enormous sum of money in 30 days.

Anyone who has worked with a "pre-foreclosure" in Northern Virginia knows that what is owed on the property is more than the current market value of the property. So the idea that you can walk away a short time later with a profit is ludicrous. Second if the home is in "pre-foreclosure" in order to buy it at less than owed is called a short sale and it requires lender approval. The property is not being sold for pennies on the dollar but at today's market value. There is no huge profit waiting for you when you lock up the property and there isn't another buyer you can assign the contract to either, the lender won't allow it.

Now I'm all for anyone who wants to make money in this market. I'm an investor and am on the lookout for properties that would bring positive cash flow as an investment and a positive return on my money in the long term. In today's market this is the strategy that is going to make buyers millionaires. It won't happen overnight and it won't happen in a year. It happens one property at the time over period of time. It is a strategy that involves finding a good value in an area where you want to live in or where you can see a positive cash flow as a rental property.

The infomercial gurus aren't getting rich flipping properties in today's market. They are getting rich selling books and workshops. Don't be misled about how to make money in buying foreclosures. Talk to an agent who is in the trenches in your area. Talk to a financial advisor or an accountant. Don't buy into the infomercial hype. You could end up being the next homeowner facing foreclosure.

When your house is in foreclosure you are too!

Posted by Cindy Jones-Northern Virginia Real Estate & Military Relocation Services on 06/01/2008 02:55 PM

Comments (10)

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10 Comments on Another Get Rich Quick Scheme Hits the Airwaves

It is amazing that these scams continue to pop up, and they keep finding people to put their trust in them. As realtors, we know all too well that they are selling nothing more than snake oil.

06/01/2008 03:02 PM

by Michael Mackey (R) ABR, CRS, GRI (CENTURY 21 All Islands)

Those infomercial guys must really be making a fortune these days - Everybody wants something for nothing and foreclosure riches is the latest golden goose - a fairy tale for most people.

06/01/2008 03:03 PM

by Bill Austin (East Valley Living)

Cindy~ It aggravates me that these people with these ads trick the unknowing public into believing them, and just take their money!

06/01/2008 03:06 PM

by Owensboro KY Real Estate Specialist Vickie McCartney Broker,ASP,ABR (Home Realty GMAC Real Estate Owensboro Kentucky)

Cindy - good post. Nice concise explanation of why this doesn't work. I usually tell people that if they could make so much money at (scam nomme d'jour) they would be doing it rather than selling their "secret".

06/01/2008 03:14 PM

by Mike Saunders (Keller Williams Realty - Greater Athens)

I had a past client who was to be foreclosed. He had scads of offers to help in his mailbox everyday. For money, they could all help him. I told him they were probably all ways to try to get more money out of him.

06/01/2008 08:24 PM

by Barbara S. Duncan ABR, CRS, GRI, e-PRO Searcy AR (RE/MAX Advantage)

This is sound advice and I thank you for it. When I got started, I actually bought and read and listened to a whole bunch of those programs. I think there is some value in the information. But I agree that I will not happen over night. Anyway, thanks again.

06/02/2008 12:43 AM

by Welthkick.com -- Jason

There is money to be made for the careful, and shrewd investor, but it is definitely not for everyone. In fact over 90% of those who try it fail. The infomercial is just the latest means being used to lure in the public. There have been investment guru's hawking their wares for decades now. Some have useful information, and some are just scam artists. It is getting harder to tell the difference these days.

06/02/2008 05:24 AM

by KEVIN CORSA H.I.S. Home Inspections Stark & Summit County, OH Home Inspector (H.I.S. Home Inspections (Summit, Stark Counties))

If there is a natural disaster you see people charge more for materials, if there is a food shortage people do the same thing. Unfortunately I too saw these info-mercials and was appalled by them. We run a foreclosure tour bus that does private tours seven days a week in our area. The one thing that we stress on the tour in that we are not there to sell anything unless the people see something they like. We are there for education and resources to the 1000's of people who are interested in this market during these times. By watching TV at 3 am and spending all of your hard earned money would not make you a foreclosure expert and could ultimately make your financial problems worse over time because of costly mistakes you will make in your buying process. Great blog and keep up the great work!

06/02/2008 05:26 AM

by Bill Mitchell (Marc Joseph Realty & ForeclosureToursRUs.com)

Cindy - These type of shows can be very misleading to the public.

06/02/2008 05:30 AM

by Sam Miller (RE/MAX Stars Realty)

These scam artists obviously don't believe in karma....won't they be surprised when payment is due!

06/02/2008 11:56 AM

by Bill & Barbara Jo - Florida Realty Professional - AHWD (Charles Rutenberg Realty)