House-Flippers Target Foreclosure Sales
Big profits loom as lenders offload homes at auction
By Rob Quinn, Newser Staff
Posted Dec 8, 2009 5:51 AM CST
A house with a pool is advertised for under $80,000 in Stockton, Calif. Around a fifth of homes sold in trustee sales in the state now go to investors instead of lenders.   (AP Photo/Marcio Jose Sanchez)

(Newser) – House-flipping is making a comeback as investors seek fast profits from foreclosure auctions. Lenders are overwhelmed with property, especially in foreclosure hotspots like California, Nevada, and Arizona, and their haste to sell off their huge supplies of homes can mean big flip profits for investors with knowledge of local markets, plenty of cash, and a willingness to take risks.

"The banks are so screwed up" that they don't often don't realize the true value of the property they hold and set minimum bids far too low, one Phoenix-area investor tells the Wall Street Journal. Buying at auction comes with plenty of risks, however. There are no public viewings for the homes on sale, and many investors have ended up making a loss after discovering that occupants facing foreclosure had badly damaged the interior.

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Showing 3 of 4 comments
Stasis
Dec 8, 2009 12:47 PM CST
Great. So the same people responsible for the inflated housing market are at it again. Joy. Just because you threw a coat of paint on a house does not make it work 75,000 more than you paid for it. Stop watching HGTV...leave the remodeling to the professionals...
justme
Dec 8, 2009 9:51 AM CST
Done right, this is Small business at its best. Done wrong, it is fraud. Buyer beware.
Snarfeh
Dec 8, 2009 5:22 AM CST
Agreed! Some of the people who do this are home inspectors. They know what to do get a home to pass inspection, but they don't actually do repairs or remodeling.