Los Angeles, CA · Member since 2009 · 717 posts · 50 votes
Anyone here that does foreclosures feeling guilty at times? Basically, we're taking advantage and profiting while others in bad shape. I would like to do this niche, but having second thoughts due to my conscious telling me it might be wrong. Some thoughts and ideas would be great. Thank you.
Indianapolis, IN · Member since 2008 · 244 posts · 36 votes
16y
Greg if you feel bad about buying a foreclosure then the Real Estate business will eat you alive!!! How will you feel about evicting someone that doesn't pay you rent? Foreclosures are a part of life and has been for ages. To answer your question, I don't feel guilty at all, never though about that. Drive on and you will be fine, someone has to do it.
Real Estate Investor · Fresno, CA · Member since 2009 · 105 posts · 71 votes
16y
Interesting question. I have bought 12 REO properties thus far and I haven't felt even close to bad or guilty for buying property at close to land value.
In the end the bank wouldn't take my offer if they had a better deal. I make 10+ offers a week so the bank says no a lot which is totally their choice ... I'll keep trying to buy more
Real Estate Investor · North Carolina · Member since 2008 · 1k+ posts · 483 votes
16y
I'll tell you who feels bad -- a local REO broker I know who goes out to change the locks on his company's REO listings.
The worst cases are when the foreclosed property owner hasn't told his tenants, usually keeping their rent money instead of continuing to pay the mortgage.
You can imagine the scene when the Sheriff shows up to set out these innocent tenants while the broker changes the locks.
Indianapolis, IN · Member since 2008 · 244 posts · 36 votes
16y
Greg if you feel bad about buying a foreclosure then the Real Estate business will eat you alive!!! How will you feel about evicting someone that doesn't pay you rent? Foreclosures are a part of life and has been for ages. To answer your question, I don't feel guilty at all, never though about that. Drive on and you will be fine, someone has to do it.
Investor · Mableton, GA · Member since 2009 · 1k+ posts · 465 votes
16y
Originally posted by Sanjiv Neal:
Greg if you feel bad about buying a foreclosure then the Real Estate business will eat you alive!!!
I'm not sure if I agree with that notion. Although, Real Estate require tough skin at times, having conscious is part of being human. Having said that, the way to look at purchasing REOs is this, you didn't create the problem. Whether or not you buy the property, the damage's done. We, REOs buyer, Court steps standing, are merely bottom feeders. The big sharks came in and attacked the prey who wondered into an unfamiliar (Financial) territory. We're just picking up the crumbs
Los Angeles, CA · Member since 2009 · 717 posts · 50 votes
16y
I know there's a lot of profits from Foreclosures, but sometimes I feel like taking advantage or getting the Deed from a homeowner who is less knowledgeable might not be the right thing to do. We're not helping their tough situation and we're really just out to benefit. Thanks for the replies. Any other advice would be grateful.
Real Estate Investor · New York, NY · Member since 2008 · 105 posts · 69 votes
16y
I think your looking at it from the wrong direction. Foreclosures are terrible for communities. Houses that sit vacant can be an eye sore and attract crime to communities. They lower the value of surrounding houses and degrade the tax rolls. Pre-foreclosure investors prevent this from happening. Rehabber's add value to homes and can restore neighborhood pride.
Merry Christmas & Happy Holiday's to the Bigger Pockets community.
Investor · Mableton, GA · Member since 2009 · 1k+ posts · 465 votes
16y
Originally posted by G. F.:
I think your looking at it from the wrong direction. Foreclosures are terrible for communities. Houses that sit vacant can be an eye sore and attract crime to communities. They lower the value of surrounding houses and degrade the tax rolls. Pre-foreclosure investors prevent this from happening. Rehabber's add value to homes and can restore neighborhood pride.
Merry Christmas & Happy Holiday's to the Bigger Pockets community.
That is a very good point. I see it where I buy. Three months ago bought a foreclosed house for $7,500. The house was previously purchased in 2004 for $54,000. The whole area went down fast but because of the recent cheap prices, it started taking off thanks to many investors who bought those house, rehabbed them and rent them out. There are three houses right across from the house mentioned above that are undergoing rehab right now. The whole neighbourhood is changing and for the better.
Greg, if you are buying foreclosures, you are dealing with the bank. The homeowner has already lost the property. The bank wants to unload, you want to buy. The bankers are big boys; they can take care of themselves (alright, maybe they can't, but that isn't your responsibility beyond paying your taxes to bail them out).
If you are buying pre-foreclosure, then disclose, disclose, disclose.
If people are desperate, you have the option whether you want to take advantage of them or help them out. Tell them the truth, explain how it works. They will very likely still sell to you, and then you are helping them out of a tough spot.
Lie to them, pressure them, trick them, and then you are taking advantage of them.
I've been doing real estate for decades. Believe me when I say, you do not have to trick people in order to get good deals. You can be honest and not ashamed to look yourself in the mirror and still get plenty of good deals and still make plenty of money.
Real Estate Investor · Philadelphia, PA · Member since 2008 · 38 posts · 6 votes
16y
if it's a pre-foreclosure you're helping them out by saving their credit. or even moving them out to an apartment vs having nowhere to go.
if you're buying from the auction... it's not your fault they went foreclosure and that you are buying it at an auction. like someone said above you're helping the neighbors out by adding value to the property.
I just bought a property for $15k and at the closing after all the taxes, water bill, etc the seller walked away with $200ish. So I felt pretty bad and cut them a check for $5,000. I'm making $35,000 on this deal and I felt like they deserved the extra check. if it wasn't for them I wouldnt have gotten the deal. At the same time, I would've been 100% cool with it too if I didn't cut them that check. It just really depends on how i feel sometimes.
On the other side, it ain't my fault that I know how to get a property for so so cheap. If you feel THAT bad... you should buy every property for MARKET price. haha jk jk I hope you get the point. =)
If you don't feel good about what you are doing for your clients, then GET OUT OF THE BUSINESS. You are probably ruining it for others if you feel that you are taking advantage of others.
Real Estate Investor · Wake Forest, NC · Member since 2009 · 10 posts · 0 votes
16y
Foreclosures are going to happen regardless of your feeling bad about the situation of someone having to go through the unfortunate process. You could either move forward in knowing that it's going to happen or sit on the sidelines.. Man up & move on... Merry Xmas everyone..
Investor · Mableton, GA · Member since 2009 · 1k+ posts · 465 votes
16y
Originally posted by Fred Bauer:
If you don't feel good about what you are doing for your clients, then GET OUT OF THE BUSINESS. You are probably ruining it for others if you feel that you are taking advantage of others.
I don't really understand that statement. How someone who have conscious problem "Ruining it for others"? All there is to understand here, as mentioned before, is that in 99% of the cases, when we, REI are getting involved, the damage is already done. There is noting for us to make things better by NOT getting involved.
I'm 100% with P NW on this. Disclose, disclose, disclose!!! It's not only the moral practice, it is also good business!!
Investor · Melbourne, FL · Member since 2008 · 90 posts · 39 votes
16y
Originally posted by Eddie Ziv:
Originally posted by Fred Bauer:
If you don't feel good about what you are doing for your clients, then GET OUT OF THE BUSINESS. You are probably ruining it for others if you feel that you are taking advantage of others.
I don't really understand that statement. How someone who have conscious problem "Ruining it for others"? All there is to understand here, as mentioned before, is that in 99% of the cases, when we, REI are getting involved, the damage is already done. There is noting for us to make things better by NOT getting involved.
I'm 100% with P NW on this. Disclose, disclose, disclose!!! It's not only the moral practice, it is also good business!!
If the OP does not feel good about what he is doing, then that shows in the way he portrays his business. When dealing with distressed homeowners, I have found that they look to blame somebody other than themselves. So, dealing with an investor who is not completely convinced that his/her business model is in the homeowner's best interests can and usually does cause that homeowner to blame the investor. This, in turn, leads to the negative press we see every day on investors.
It was not investors that caused the housing bubble or the crash. It was speculation by people who did not have a clue as to what they were doing.
If you are not convinced that you are offering the homeowner a service that is in their best interest, then you should not be working with that homeowner.
One of my first questions to every homeowner I deal with is whether they want to stay in the home. If so, I then recommend some ways that can be accomplished. If none of those will work, I will have done everything I can to help the person short of paying the mortgage myself, so at that point, I know that what I offer is in their best interests. All of this pertains to working with the homeowner.
When I deal with the lender, part of my short sale package is a cover sheet that states my conditions if the short sale is approved. The first condition is that I want all deficiencies waived for the homeowner. At this point, I have not had a 1st mortgage refuse to accept this, even though I deal with properties in a recourse state, meaning the lender has the right to pursue the deficiency.
Based on the OP's post, it appears he is not talking about REO's, but short sales. If he is talking about REO's, then he is not taking advantage of anyone, as the homeowner has already lost the house. The bankis now the owner. If that is the case, then the only possible party that could be taken advantage of is the bank.
Real Estate Investor · Toledo, OH · Member since 2008 · 234 posts · 53 votes
16y
Well, I can relate to feeling bad. Not so much guilty for buying a property that has gone into foreclosure, but bad for the previous owners. In reality someone will end up buying the house if we don't.
Certified Public Accountant · Chattanooga, TN · Member since 2008 · 279 posts · 151 votes
16y
I agree with most of the crowd. It's not a bad thing to do. Someone needs to buy the properties and fix them up. If investors don't buy them, fix them up, and rent them then they will deteriorate and make the rest of the neighborhood look bad. The investor didn't put the person in the situation, they are simply offering a solution.
It's sort of like being a mortician. Just because you make money when people die it doesn't always make you a bad guy. :wink:
Attorney · Raleigh, NC · Member since 2008 · 4k+ posts · 1k+ votes
16y
Originally posted by Greg Park:
Anyone here that does foreclosures feeling guilty at times?
Yeah I get a group hug and sing Kumbaya before going to the bank. I lost my home to foreclosure and turned around and started buying foreclosures. It's just a house.
Real Estate Investor · North Central Arkansas · Member since 2009 · 509 posts · 178 votes
16y
What's done is done and once the locks are changed you can't do anything about it. As someone previously mentioned, a lot of those homes are ones that were bought at the peak of the market. Those homes should have been short sale's but went to foreclosure instead.
Like Eddie said, it's human nature to feel sorry for people (i think that's what he said??). Anyway, if it makes you feel bad why not work with a local church group and give back to the community with your profits? That's exactly what i'll be doing in 2010, not because I feel bad but because it makes me feel good to give back.
Profit is NOT a dirty word, it's part of life and what makes the world go around. If you profit, get rich and horde your money then shame on you. If you profit, get rich and help others along the way then where is the harm in that? That's my 2 cents.
Real Estate Investor · Ocala, FL · Member since 2008 · 742 posts · 463 votes
16y
Personally, I look at it this way. I am understanding of the bad choices that the property owner has made. I am also understanding that this is not a pleasant situation for the property owner. I hope that they learn from the mistakes they have made. I hope that they are able to pick themselves up and move forward.
The End!
Oh yeah, and I really enjoy watching the bank accounts grow.
Real Estate Investor · melbourne · Member since 2008 · 44 posts · 1 vote
16y
Originally posted by Greg Park:
Anyone here that does foreclosures feeling guilty at times? Basically, we're taking advantage and profiting while others in bad shape. I would like to do this niche, but having second thoughts due to my conscious telling me it might be wrong. Some thoughts and ideas would be great. Thank you.
If you are feeling guilty then you should watch this funny video of the 12 months of Christmas. I do not want to make light of someones mistakes but as you watch the video you will see it's not all bad for the homeowner.
http://www.youtube.com/watch?v=M_J7gXDr3GA
Real Estate Investor · melbourne · Member since 2008 · 44 posts · 1 vote
16y
Originally posted by Ken Hughes:
Originally posted by Greg Park:
Anyone here that does foreclosures feeling guilty at times? Basically, we're taking advantage and profiting while others in bad shape. I would like to do this niche, but having second thoughts due to my conscious telling me it might be wrong. Some thoughts and ideas would be great. Thank you.
If you are feeling guilty then you should watch this funny video of the 12 months of Christmas. I do not want to make light of someones mistakes but as you watch the video you will see it's not all bad for the homeowner.
http://www.youtube.com/watch?v=M_J7gXDr3GA
It is actually the 12 months of default song and everyone should watch it. There is alot of truth in it and I see it all the time in talking to homeowners.
Investor, Entrepreneur, Educator · Springfield, MO · Member since 2009 · 21k+ posts · 12k+ votes
16y
I'm missing something here. I have purchased pre-foreclosures and dealt with the homeowner, caught payments up, assumed the loan, gave them cash and time to move on from a situation where they would have nothing two months later, so, feel bad, not at all, from where they were, they gat a heck of a deal! But buying foreclosures? The past owners aren't there, they don't own the property the bank does, so I don't see this as having anything to do with the people who lost the property, they are already gone! If that's how we feel about it, why not feel sorry for the guy who built the house 20 years ago who sold it for 65K when he should have held on to it and sold it 5 years ago for 139,900 held it, rented it and depreciated it, Isn't that hine sight? Buying these properties is almost a public service! Bill
Real Estate Investor · melbourne · Member since 2008 · 44 posts · 1 vote
16y
The problem will never be solved without us. We did not create the problem but we are the cure. Interesting article in the NYT about Cape Coral, FL today.