April 1, 2008
Benefitting from Foreclosures
I've seen several items, including video on our own site, that offer information for builders and remodelers who want to buy foreclosed houses and resell them at a profit. From a financial point of view, it makes a lot of sense — as long as you're willing to take a risk. But I have to admit that the idea of buying the home of someone who had to give it up involuntarily seems a bit ghoulish to me. It reminds me of vultures circling patiently. (There are probably builders who are seeing vultures, too. It's a scary time.)
Still, once a family has lost their home to foreclosure, someone has to take it over. Mortgage companies are not real-estate companies or developers; they don't want to hold onto these properties any longer than necessary. In fact, part of what makes foreclosures attractive as investments is the fact that they're often available for less than the amount owed on the mortgage — and a lot less than market value, even with today's current prices.
When I was house-hunting in December 2004, I saw one house that was a foreclosure. It was beautiful, but the seller had put a lot of work into it. The previous owners had stripped the place of everything that wasn't nailed down — and a lot of things that were. Fortunately for him, prices were healthy enough that the additional investment probably didn't hurt him too much, but I bet he'd be a lot more careful now.
What do you think? Does the idea of taking advantage of someone else's financial crisis seem ... well, kind of bloodthirsty to you? Would you be uneasy buying a foreclosure? Or do you look at such situations as an opportunity to make lemonade out of lemons from someone else's tree? I'd like to know, at least partly because my brain tells me that my emotions are being too squeamish. And partly because I'd like to hear from builders or homeowners who have been able to find the silver lining in the clouds over the housing market.
But another reason is that with any luck at all, we won't see another market like this for a very, very long time. Maybe it's a chance to make hay before the sun shines again.
Posted by Marjie O'Connor, HGTVPro.com Staff at 4:45 PM | Comments (0)
