Many times I have buyers aske me about purchasing a foreclosure, so I decided to compile a list of things you need to know before buying a foreclosure.

I think that sometimes people have a unrealistic view about what is involved in buying a foreclosure.  

   Yes, there are some great values in foreclosures but there are a few things that you need to be aware of before you buy a foreclosure. While it is true that the bank, mortgage company or LLC that owns the foreclosed property needs to recoup some of the money that is owed on the property, they need to get the debt off of their books so they may end up taking a substantial loss.  In the Hampton Roads area of Virginia many foreclosures are selling for about 70% of what is owed on the property.

If a great buy becomes available on a foreclosure, more than likely there will be a lot of bids so try to make sure that your bid is the most attractive to the owner. If possible pay cash, that will make your offer much more favorable.

Most foreclosed properties are sold "as is" so it will be worth while to hire a home inspector.  It is doubtful that any repairs will be made by the owner, but you may save yourself from buying a lemon or money pit. 

There is much more paperwork involved with the sale of a foreclosure than with a typical sale.  The owner typically requires more   disclosures than in a normal sale and this paperwork can slow down the sales process.

If you are purchasing a foreclosure as an investment property, you will need at least a 20% downpayment but in order to get the most favorable interest rate, you will need a 25% downpayment.  Of course the interest rates will be higher on foreclosures than on a primary dwelling.

In order to get the most up to date data on foreclosures for sale, make sure you have a realtor who is familiar with your local real estate market.