As the sub-prime mortgage mess continues taking its toll on home buyers and financial institutions, thousands of distressed properties are hitting the market at bargain-basement prices. Savvy buyers can pick them up cheap and resell them for a tidy profit.
At least that's the pitch appearing with increasing frequency on Craigslist and elsewhere.
The reality is that such offers may be little more than an inducement to spend hundreds of dollars for property listings of dubious value, or ones that most people could obtain free from banks and public records.
San Jose resident Roz DeKett, 47, answered an ad on Craigslist for a soon-to-be-foreclosed-upon house in the Bay Area. She ended up speaking with a sales rep for a Los Angeles company called Home Access USA, which specializes in distressed properties.
DeKett said she was told that information about the home she was interested in and other properties would cost her $198. The money, she was told, would be refunded if DeKett decided within 24 hours that she wasn't satisfied.
After receiving the listings, DeKett discovered that it was up to her to contact individual property owners and inquire whether a particular house might be for sale. If so, she'd then have to negotiate a sale that would include taking over the seller's outstanding mortgage.
DeKett called Home Access back and asked for a refund. She said the sales rep replied that because she'd already accessed the online listings, no refund would be possible.
"The whole thing looked too good to be true," DeKett said. "Guess what?"
Home Access' president, Mike Davenport, told me his company wasn't doing anything wrong, and was in fact a victim of its own success. More from him in a moment.
Irvine-based RealtyTrac, one of the more reputable foreclosure-listing services on the market, reported last week that foreclosures were up in most metro areas, with California, Ohio and Florida accounting for the majority of cities hardest hit by the problem.
A wide variety of smaller services -- try Googling "foreclosure listings" -- has emerged in recent years to connect distressed properties with potential buyers. Almost all involve fees that can run hundreds of dollars.
"Every time there's a downturn in the market, you see these types of entities appear," said Tom Pool, a spokesman for the California Department of Real Estate. "Some are definitely scams."
