LUBBOCK, Texas — Buying a foreclosed home is not for the faint of heart. KLBK News investigated some of the risks and rewards that come with ‘flipping houses’.
“People think, ‘oh everyone makes money, and everyone gets rich,’ but in all honesty that’s just not the case,” said Ryan Bigbee, Attorney with Curtis & Bigbee Law Office.
Every first Tuesday of the month, a crowd of people gathers at the steps of the Lubbock County Courthouse to bid on foreclosed houses. These homes were taken back by the banks after their homeowners defaulted on 90 to 120 days of payments.
“You feel bad because at one point this was a home, but at the end of the day you gotta remember these are going up no matter what,” said Gary Lindblom, bought a foreclosed home. “I’m not trying to capitalize on someone’s misfortune, but someone is going to buy it!”
Once a house is purchased – it can be sold for enormous profit. For example, a home that is currently listed to go to auction has an opening bid of $35,000, but has a real estate value of $196,000.
“Even if you go small, which I would recommend, it can be a really big payoff,” said Kent Hebison. “If you do your research, and your homework, you should be good when you come in.”
However, this isn’t always the case. Ask anyone around, and you’ll hear a few stories about houses with bugs, no ceilings, or even being burned to the ground – costing thousands of dollars. Likewise, property taxes follow the foreclosed homes and will then become the new owner’s responsibility.
“You can’t go in the home beforehand, and if you have already bought the house and didn’t take this into account, then there is really nothing you can do,” Bigbee said.
Even in the best of circumstances, the housing market can quickly change. New homeowners can walk away with a couple thousand dollars in their pocket, or get stuck with a money pit.