A recent article on CNN provides some good basic pointers to people interested in purchasing foreclosed properties. It provides definitions of the various stages at which these properties can be purchased, and the varying degrees of risk involved at each level. In addition, it gives some of the most common mistakes made by potential home buyers when deciding on a property, such as not knowing what comparable properties cost in relation to the home one plans to bid on.


In a capitalistic system, profiting off of the misfortune of others is simply a necessary evil (at least until we become the socialist empire that some think is imminent). The key for all of us is to make sure that we educate ourselves thoroughly to decrease the possibility of ending up on the wrong end of that equation. Business is often cold-blooded; there is little sympathy for people who are taken advantage of, especially when it is because of a failure to be informed. That in no way excuses individuals or companies who engage in unethical or criminal activities (such as the corporations who specifically targeted black people for subprime loans, even if they qualified for higher-grade, lower-interest loans).

However, the reality is that many of those who engaged in predatory behavior are sipping Corona's on a beach somewhere, while those they preyed upon will likely spend years attempting to recover from their loss of property, if they recover at all. We cannot live and do business based on how things should be; we have to deal with reality. There is no "moral victory" in being passive and uninformed when it comes to handling business.

Regarding foreclosures, the first thing that people need to know is that (despite what many seem to think) buying foreclosed properties is not a get rich quick scheme. The CNN article referenced provides good basic information, but being a true real estate entrepreneur requires much more information and work. As ironic as it may sound, many people who have purchased foreclosed properties have been foreclosed upon themselves because they did not do the work necessary to get an accurate picture of the current and future value of the property they purchased. Property values don't just fluctuate from city to city, but from street to street. A diligent real estate purchaser will do a lot of legwork, including gathering information from a variety of sources (and inspecting the property if possible) before making any final decision. There is no need to rush to buy any one particular property, especially now, given the high numbers of foreclosures.

If you are interested in gambling, go to a casino or play the lottery. However, if you want to be a player in the real estate game, get your knowledge base up (and finances correct) before thinking of making an offer on any property, unless you want to be another foreclosure sob story.