There’s an old adage: “If it sounds too good to be true, it probably is.” And there’s the other one: “Buyer beware!”

Many of us have turned on the TV only to get hit with some of those seminars hosted by so-called self-made millionaires who boast of their “rags to riches” story of all the fortunes made (they call themselves “gurus”) by buying and selling foreclosed properties and short sales and how “you too, can be a millionaire like them!” I often wonder how so many people can listen to them and believe that buying and selling distressed properties is that easy. If it was truly that easy, don’t you think the bank that foreclosed on these homes would have taken advantage of the “easy money” to be made before anyone else got near it?

Of course, the part about making easy money on distressed properties is always accompanied by orchestral music while the presenter barks out all the essentials! There’s a drumroll and then the follow-up portion that all you need to do is buy their “How to make a million dollars buying foreclosures and short sales for $39.95 in 6 or 7 easy payments.” This is always said in hushed tones to get the masses excited about the prospect of making quick money so they run to get their credit cards, thinking they’re the only ones buying the book.

Obviously, the “magical book” is the way these salesmen are actually making their millions, and once the masses get their hands on it, whatever drivel is written there is probably out-of-date, and the poor person who had their hopes invested in making millions is left $39.95 poorer for their efforts.

For those of you who are not familiar with the difference between foreclosures and short sales, I will give you a brief background.

A foreclosure covers a large area. When a homeowner has a mortgage that has gone delinquent for three months or more, typically the mortgage automatically falls into a category of “pre-foreclosure.” This means the bank will give notice to the homeowner that they are beginning the procedure of foreclosing on the house, but notifying him that if they bring the mortgage payments up-to-date together with any penalties incurred as a result of the delinquency, the homeowner can hold onto his house and avoid the foreclosure and thus, put his mortgage back in good standing.

In some cases, the homeowner will be able to come up with the necessary funds to pay off the delinquent mortgage payments and whatever interest and penalties accrued, and the foreclosure action is halted and dropped at that point by the lender.

In other cases, a homeowner may not be able to pay the delinquent mortgage payments, and may have to work out some kind of payback agreement with the bank to catch up on the monies owed, or agree to put the house on the market and pay off the mortgage once the house is sold rather than waiting for the bank to foreclose on the house and take it in their name in lieu of the mortgage.

Sometimes, a homeowner is in the unusual predicament where they are forced to sell the house to pay off the mortgage, but the market value of the house is not high enough to raise the funds to stave off the foreclosure action and pay off the mortgage. In this case, the homeowner might opt to present the buyer’s offer to the lender, hoping they will agree to the lesser amount and approve the sale. This is called a short sale, which is basically the sale of a property made at a lower value than the amount of the mortgage. In these cases, the bank must agree to settle for the lower amount in order to consider the mortgage satisfied at closing.

The process of conducting a short sale with a mortgage lender can be a lengthy, complex process, and can take anywhere from several months to over a year, with tons of paperwork and e-mails going back and forth between the seller, buyer, and lender. It is not an easy process. Those “rags to riches” stories the millionaires talk about are mostly in the realm of “fairy tales.” The only one who is making a quick buck is the publisher of the book. So, like everything else in real estate: buyer beware!

Anessa Cohen lives in Cedarhurst and is a Licensed Real Estate Broker (Anessa V Cohen Realty) with over 20 years of experience offering residential, commercial and management real estate services. You are invited to visit her website at She can be reached at 516-569-5007 or Readers are encouraged to send any questions or comments by email to



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