Fall 1997 Volume II Issue 4

Scruples. Let's see, where did I put my scruples? I know they're around here somewhere. I want to show them to you just so you know I have some. Oh well, remind me to look for them later. Right now let's get to the topic at hand: taking advantage of other people's misfortune. Or, in real estate parlance, buying a foreclosure.

Most of the time a deal that looks too good to be true is just that. But every once in awhile you hit on a bargain that really is a bargain. Just ask Mr. & Mrs. Lucky. Mr. Lucky is an old high school friend of mine who, with his wife and daughter, recently moved to New York City.

The couple was not new to the real estate game, having been homeowners in California and then Florida, but they were shocked at the cost of housing in the Big Apple. Among the factors they had to consider were private school for a five-year-old and that they both work freelance, which at times can mean a very uneven cash flow. They decided that they could safely budget $1,000 a month for housing. "We couldn't find anything affordable in the rental market," says Mr. Lucky. "We couldn't afford not to buy."

They looked at a few properties, but didn't find much to their liking. "It was getting really desperate," says Mrs. Lucky. So, being Buddhists, they appealed to the universe for help. "One day I just said to the universe, 'That's it! Either we find an apartment or we have to move!"' About four weeks later they were the proud owners of a two-bedroom co-op on Manhattan's tony Upper East Side. The purchase price was a very cool $20,000.

No, there are no zeros missing from that number. Twenty grand, free and clear. Sure, it needed some work. But hey, for what usually amounts to just a down payment, they got the whole enchilada; so who's got a right to complain? What the Lucky's stumbled onto, purely by accident, was a foreclosed property. And as it turns out, the Lucky's were very lucky, indeed. While the foreclosure market offers the savvy buyer real opportunity, there are a lot of potential complications and pitfalls.