"You Can Make A Fortune In Foreclosures!"

That's the excited claim I hear coming from my radio every morning.  A local commercial is advertising foreclosure workshops and stating several examples in their commercial of great deals to be had.

"For example, a house in Tacoma valued at X was recently sold for X.  That's $100,000 in instant equity!"

Question is, how are they determining "value"? I'm not certain myself, but from hearing the examples it sounds to me like they are using the previous purchase price to determine value.  You know, the prices from 2005-2007 that were inflated to begin with.  That is not the value anymore.

Sure, there may be a little bit of instant equity.  But $100,000 or more? You'll be lucky to purchase a bank-owned or foreclosure and reap 4-or low 5-figure gains right off the bat, and that's after you put in some work.

So a note of caution when listening to these commercials, and remember, if you have any questions about any home, you can always ask your favorite real estate professional to help you with a little research.

Thanks for stopping by my blog!

Comment balloon 6 commentsLisa Bosques • September 15 2009 09:07AM


It's not equity if you can't sell it the next day. We have people that forget, that purchase can be used as a comp for the next appraisal. They drove the property value down by buying the home. By my estimates, it would take 5 years to break even.

Posted by Terry Miller, Miller Homes Group and Tyler Apartment Locator (Miller Homes Group) almost 10 years ago

It's distgusting how many people are willing to profit from other's misfortunes.

When clients call me about these scams I simply say, "If you could get a $300,00 home for $30,000 don't you think these people would buy the houses themselves?"

Posted by Richard Shuman, Real Estate Broker - Orlando Area - Love Referrals (The Only B.S. I Have is from the University of Massachusetts) almost 10 years ago

I agree with what happens with MOST of the folks that fall into some of these info commercial scams.  On the other hand, I know personally of two local friends that are doing VERY well in the foreclosure rehab market.  Most do not have this kind of good fortune as you must have some skills to make it work on a consistent basis.  Unfortunately for me, neither one of these "investors" use Realtors.

Posted by Edward Bachman, Your Kingwood TX Realtor (EXIT REALTY SOLUTIONS) almost 10 years ago

You are right, equity is what you get out of the property once SOLD

Posted by Edward & Celia Maddox, EXPERIENCE & INTEGRITY - WE TAKE THE HIGH ROAD (The Celtic Connection Realty) almost 10 years ago

Terry - I agree that it'll take quite a few years to make a profit on most homes you buy today, unless there's a lot of sweat equity to be had.  Flipping a house is difficult these days at least in our area.  But for buying rentals?  We are seeing some positive cash flow potential now!

Edward & Celia - exactly.  SOLD is the operating word here.

Edward - That's right, investors should either have some experience and skills with rehabbing or be willing to put up with the learning curve. There are definitely opportunities for people who know what they are doing, and yes, they then usually don't need us, unfortunately.

Richard - unfortunately I feel like at least with this commercial they are not being forthright (I realize they only have 30 seconds). They're playing off of the emotions of people, some of whom might think that this kind of profit is an everyday occurrence.


Posted by Lisa Bosques almost 10 years ago

I always think, if they are so dang successful, why are they selling classes (or videos, or CD's, etc)

Posted by Stephen Kappre, Helping You Home (KW Hometown) almost 10 years ago

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