I’m a science fiction fan. I write the stuff too. (Four paper-and-ink books are on Amazon, and a free online collection of stories at richardbellushjr.blogspot.com .) Accordingly, I’ve read or watched a lot of it, including the flawed but enjoyable movie Stargate (1994) and its spinoff TV series Stargate SG-1. In both presentations, the “stargate” is a device that opens traversable wormholes between planets.
When I recently spotted a passing reference in a science magazine to an actual Stargate Project, I couldn’t resist investigating further. Regrettably, the project had nothing to do with wormholes to distant planets. It was something scarcely more likely. The real Stargate Project was an investigation of military and intelligence applications of psychic phenomena. Conducted first by the Pentagon and then by the CIA from the 1970s through the 1990s, it produced nothing useful in all that time but paychecks for parapsychologists. Or at least that’s the cover story. How did ESP enthusiasts sell this idea to the Pentagon and CIA in the first place? The same way any enthusiast sells any kind of silly idea to anyone: by exploiting the listener’s desire to believe.
We all remember the plethora of TV gurus back in 2006 urging us to become “real estate millionaires” by purchasing properties “with no money down!” How many people took their advice (after buying the gurus’ how-to books and dvds) only in 2010 to owe 35% more than the value of those properties? The buyers who put 5%, 10%, or 20% down (as most, in fact, had to do) arguably fared even worse: their investments are gone and they still are underwater on the loans. You might think the gurus would be in hiding, but no. They are back. They never really went away. Now they are promoting buying foreclosed properties “for a fraction on the dollar!” (Just a mathematical note: 5/4 is just as much a fraction as 4/5.) They find eager listeners.
Actually, for all the concerns in the news this week raised by sloppy foreclosure paperwork at banks, there is a kernel of truth in this round of TV exhortations. Prices are down, interest rates are low, and there are opportunities in foreclosed properties. But a quick reality check is in order: there exists no handy list of foreclosed houses which buyers can snap up and then immediately resell at $200,000 profit apiece. Most of the new customers coming in my real estate office door these days are convinced by TV pep talks that such a list exists, and they are annoyed when I don’t produce it. You’ll have better luck finding this list using those unemployed Stargate psychics fired by the CIA. The banks that own foreclosed houses are the same banks that pick our pockets at every turn. They are the banks that charge $2 for using an ATM, $20 for letting a checking account fall below $2000, $10 for writing too few checks per month, $30 for writing too many, and $50 for being overdrawn. They do not then turn around and give away $200,000 to any passerby. They sell each foreclosed property for the highest price the market will bear. This is not much less than a private individual could get for it.
Once again, there are bargains to be found among foreclosures. Banks have no emotional stake in their ownership of these properties and they take rational account of future carrying costs if a house doesn’t sell. So, the opportunities for making a good deal are real, but I have yet to see anything like the sort of windfall on which so many customers have set their hearts. Heck, I’d buy it myself. The typical foreclosure opportunity is a distressed property which, after a year of repair and hard work, might net you $20,000 for your trouble. $20,000 is nothing at which to sneeze, and some people do make a living by buying and fixing one house after another, but it is no get-rich-quick scheme and there are no guarantees.
Think there is a winning infomercial in “the slow and hard way to modest profits?” I don’t think so either.