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.