Buying foreclosures at auction for resale is a new investment trend in real estate.

Barclays Capital estimates that banks and mortgage investors have 639,000 foreclosed homes for sale across the U.S., mostly in Florida, California, Arizona, and Nevada. Most banks are eager to unload these properties and are willing to take much less than the mortgage balance.

Real estate-savvy buyers with cash purchase properties at fast-moving auctions in hopes that they can do some minor fix-ups and resell them at a profit. Often potential buyers never have a chance to study the properties-or even inspect them-before bidding.

You have half an hour to make a half-million-dollar decision, says Damon Lines, an executive at, a Phoenix firm that provides information to foreclosure investors and bids on their behalf. That's something most people can't or aren't willing to do.

Sometimes foreclosure flips make investors thousands of dollars, but some of the properties turn out to be bad buys because the homes have been abused or lack a clean title. As one investor says, It is what it is. You deal with it.

Source: The Wall Street Journal, James R. Hagerty (12/08/2009)