Where are they all these foreclosures coming from?

We all know that the market is being flooded by foreclosures at the moment. This has some people running for the hills, while it has left others salivating over the feast of great buys on the market. But one question that many of us are forgetting to ask is: “Where are they coming from?”

I had a conversation a few weeks ago with a potential buyer who seemed averse to dealing with any foreclosures. At first I thought he simply didn’t want to deal with any of the many hassles that come from dealing with these notoriously slow and irrational sellers. But that wasn’t it. He wasn’t avoiding the banks, he was avoiding the former owners. He didn’t want to lend assistance to a system that was taking away peoples’ homes.

This seems to be a commonly held belief. The media loves to paint a picture of poor innocent families being bullied around by lenders and mortgage brokers. Or that adjustable rate mortgages are forcing them to fall behind in their mortgage payments. That these “victims” are the source of this surge in foreclosures hitting the market.

Well I have news for you. That isn’t the case. Sure that kind of thing is happening right now. Its been happening for years. But it doesn’t account for where we are now. No, this market has a different source. Something worse or better (depending on how you look at it): the short sighted businessman. Those shortsighted investors who bought not because a deal made sense, but because they could. Those investors who gobbled up no money down deals, took lots of money back at the closing table, faked seller carry backs, had an insatiable appetite for refinancing or put faith in poor property managers without a seconds thought to the consequences.

These people are the source of this buyers market. They have brought things to the way they are now. But for the scrupulous investor, this situation screams of opportunity. The false steps of these investors has cleared the way for all the opportunities that are on the market today. Those investors who have repeatedly made poor decisions, scam artists and financial parasites that have plagued the market for the past few years are slowly disappearing one by one. Enjoy the spoils with a clear conscience.