Are foreclosure specialists taking advantage of distressed homeowners?
Some “consumer advocates” claim that real estate investors are taking advantage of people in distress by buying properties that are either facing foreclosure or that have been foreclosed upon.
This is total and absolute nonsense.
Bad things can happen to good people, and those bad things might include the loss of a job, business failure, divorce, medical problems, bankruptcy, and so on. When problems like this occur, they generally compound and bring other problems such as the loss of a home to foreclosure, a damaged credit rating, and/or a default judgment against the owner that is often enforced with court authority.
The ripple effect of a foreclosure and an uncared-for home and yard extends into the neighborhood, bringing down home values and affecting the entire local housing market. Lenders also suffer because they are not getting their money. Sure, lenders can take back the property and sell it, but they are not in the real estate business and they almost always lose money on the deal. And when a lender, especially a federally regulated lender, loses money, stockholders and regulators are not happy. Another point to consider is that foreclosures and other loan defaults influence interest rates charged by lenders. In short, homes lost to foreclosure, code violations, and property abandonment have an impact on owners, lenders, the housing market, and the economy.
So enter the real estate investor.
While some criticize the investor and charge that he or she is capitalizing on the misfortunes, here’s the reality of the situation: It’s the real estate investor who risks his or her time and money. It’s the real estate investor who has the knowledge and skill to come up with a plan. And it’s the real estate investor who steps forward with a practical, reasonable, and timely solution to the problem.
The solution may not necessarily be the one that the seller or lender hoped for, but it will stop the bleeding and at least limit the losses. The investor crafts and turnaround plan that works to the benefit of all involved. Owners are recycled back into the mainstream, often saved from foreclosure, credit damage, and the default judgment. Homes are repaired or otherwise made market ready and then recycled back into the retail housing market. Debts with lenders are settled and the economic engine keeps moving. And the investors are compensated for their time, effort, and knowledge. Therefore because of real estate investors, everyone benefits, and no one is hurt—remember, the homeowner was in trouble before the real estate investor arrived on the scene.
Real estate investors who are foreclosure specialists do not deserve criticism, they deserve applause. Imagine what the market would be like if they weren’t helping people.
Robert Johnson – Wealth Intelligence Academy Coach