If you are like many buyers who have been reading the real estate section of your local newspaper, you probably think a foreclosed house may be the best deal. According to the NAR, these houses often sell for about 15 to 20 percent less than comparable homes in the same neighborhood.

Despite the seemingly great deals however, anyone considering buying a foreclosed house should heed the classic warning: Caveat emptor, or let the buyer beware.

First, getting a contract on a house in a desirable neighborhood can be hard to do. Many buyers are outdone by all-cash bidders. Buyers also need to search more aggressively for the foreclosure listings, consistently checking the market updates and then quickly visiting the properties. Buyers also need to be careful that the house is not a money pit - since most of these homes are sold as is. Remember, the banks that own them have no idea about the condition of the property or their past history.  The banks are exempt from any state mandated disclosures in the DC metro area.

If you want to buy a distressed property, you have several choices. You can buy it through a preforeclosure sale, at a public auction or through a bank or other entity that has taken ownership of the home.  There certainly are lots of opportunities to buy in this way.  Through October, foreclosures and short sales accounted for nearly 37 percent of all home sales.

I discourage buyers from  buying homes at auction because there are so many risks. Primarily, you usually can't see the inside of the home.  Talk about buying blind!  In addition,  the home won't necessarily have a clear title, which means there may be tax liens or other debts against the property. And when you buy the home, you buy those issues, too.

One of the benefits of buying a property from a bank is that the bank typically clears any title issues before it puts the house on the market.  There is a price already established. You can go inside the house with your Realtor;  you can inspect the property and make an estimate for repairs; and then you can write your offer and go.

But you need to do your research. Check out the listings in your target area. All R.E.O.'s are sold through an agent. You can find their listings directly on the big banks' Web sites, like Bank of America and Wells Fargo, as well as regional banks like SunTrust. Fannie Mae offers its listings through the HomePath Web site and Freddie Mac through HomeSteps.

Most R.E.O.'s are sold as is, so buyers should make their offers contingent on a home inspection.  Putting too many contingencies in your offer, however, is likely to derail your bid.  Buyers also need to be prepared to lose to buyers with all cash.

You may be able to increase your chances by making your best offer from the start. But you don't wnat to overpay either, so you need to research comparable sales.  Obviously working with your realtor will save you alot of time and effort here. Your realtor will be able to help you with analyzing those comparable sales and may even know of some that you weren't aware of.

Fannie Mae does give prospective homebuyers a leg up. Last month, it introduced a program that shuts out investor buyers for the first 15 days a home is on the market.  Good Luck!

If you live in the DC Metro area and want to buy a bank owned property, give Lise Howe a call at 240-401-5577 and put her and her team to work for you!