journal has discovered the surprising phenomenon of house flipping. It’s back.
We and others have noted for a while that speculation activity in many old subprime-villes is red hot, as bulk buyers buy big lots of foreclosed properties at rock-bottom prices.
WSJ: Investors compete mostly with other full-time professionals who monitor foreclosure auctions at county courthouses across the country. The bidders often haven’t had a chance to inspect the property or determine whether it’s occupied by tenants, who may be hard to evict.
Sometimes “you have half an hour to make a half-million-dollar decision,” says Damon Lines, an executive at PostedProperties.com, a Phoenix firm that provides information to foreclosure investors and bids on their behalf. “That’s something most people can’t or aren’t willing to do.”
Do you want to get in on this game? Beware. It’s easy to get hoodwinked, in part because there’s no public viewing period.
In February, the group won an auction for a home in Commerce City, Colo., near Denver, by bidding $142,000. Only afterwards did they discover that the previous owners had stripped the house of a toilet, much of the carpeting and a kitchen range. They replaced the missing items and made other minor improvements, eventually selling the house in May for $209,000. (The loan balance on the house had been $265,663.)