Flipping article

Here's a pretty good article from the Press Enterprise on flipping.

The number of houses purchased by investors at these auctions, the last step in the foreclosure process, has more than tripled in California in 12 months, from 900 in January 2009, to 3,688 in January this year.

"We have on average of three to four times as many properties sold at trustee auctions now as at the peak reached in the 1990s," O'Toole said.

Bruce Norris, a longtime Riverside real estate investor and consultant who warned other investors early on that the real estate market was about to tank, said the deluge of houses hitting the foreclosure auctions and the numbers of buyers chasing them are far beyond what he had expected. He recalled that a year ago it was common for just a handful of investors to turn out to hear the trustee's auctioneer reel off the addresses of houses for sale and sometimes the auctioneer would speak to an empty courtyard, he said.

Norris said risk is inherent in buying houses that are sold at auction "as is" with no title insurance or warranties and, often, with occupants who must be evicted. Buyers have no protection. They don't even have a right to inspect the houses for which they must pay cash. And after they make a winning bid, they cannot back out or demand a refund.

Success at the auctions depends on homework. In choosing among scores of houses scheduled for sale, it's up to bidders to review comparable sales, do a title search to find out if there are unpaid taxes and other liens and visit the properties. Getting inside a house to determine if it has been stripped of appliances or requires other major repairs can be impossible.

"Every month someone walks away thinking they have a deal -- and they have lost a quarter of a million dollars," Norris said.

Jenny Wang, part of a family business in Murrieta that has bought houses at foreclosure auctions for 20 years, said she feels sorry for beginners like the one she recently saw at auction who paid more than $140,000 for a house in Menifee that Wang knew had burned to the ground.

Newcomers cannot expect a helping hand from the veterans, who are fiercely competitive with one another and irritated by novices who tend to bid up prices beyond what makes financial sense, said Norris.