By Peter Y. Hong, Los Angeles Times Staff Writer
June 8, 2008
When Sean O’Toole decided to make his fortune in foreclosures, he figured he would have five “partners”: death, disease, divorce, drugs and denial.
The “five Ds of foreclosure,” as O’Toole calls them, refers to the life crises that had typically triggered the lender’s repossession of a home.
Now, as foreclosures multiply across California and bargain-hunting investors are starting to snap them up, O’Toole has stopped trading foreclosed houses and is instead selling a sixth D: data.
O’Toole, 40, founded the website ForeclosureRadar.com last year. The site, he said, lists every default, auction and foreclosure in California. Such information is crucial to investors seeking properties to buy, and before Internet listing services such as ForeclosureRadar.com emerged in recent years, the information often required a personal visit to county records offices.
Rather than join the rush of those mining for gold in distressed real estate, O’Toole has set himself up as Levi Strauss once did. Instead of selling jeans to prospectors, though, he is selling foreclosure data to would-be buyers.
ForeclosureRadar.com has about 1,000 clients who pay $50 a month for access to the database, O’Toole said. Along with investors, subscribers include real estate brokers and local government officials who use foreclosed-home data for such tasks as locating stagnant swimming pools for mosquito abatement, he said.
Although the foreclosure explosion is fueling his business, foreclosure sales have turned into a speculator’s market, O’Toole said.
“I’m an investor, not a speculator,” he emphasized.
The difference, he said, is that he bought foreclosures that were distressed by one of the five Ds and therefore undervalued. He then repaired the houses and their titles, adding value to resell the houses at a profit.
Such a strategy, O’Toole said, works if a market is up or down. A speculator, in his view, is someone who buys a property gambling that its value will rise with the overall market. He so abhors speculation…
