Buying A Foreclosure - Different Methods Examined.

You've seen the signs - they are everywhere.  Foreclosures are at an all time high.  Some may be in your very own neighborhood.  If you've decided that the foreclosure route is the way to go for you, do your homework ahead of time.  Determine your strategy for buying the foreclosure.

Buying on the courthouse steps:  Back in the good old days of the real estate boom, the banks might have 10-20 properties for sale at the foreclosure sale.  If you are going to the sales now, be prepared for a list of 70+ homes at any given sale.  While you can usually buy a property for the lowest price on the courthouse steps, you should double-check to see if the property has any liens or back taxes due beforehand.  Whether you check on these extra expenses or not, these bills become yours when you buy the property that day.  The buyer has no inspection period to determine the condition of the property.  The buyer also needs to have certified funds on hand because payment in full is required immediately.

Utilizing a real estate professional:  Buyers should make sure that the real estate professional whom they choose has experience in listing and selling foreclosures.  An inexperienced agent can cost the buyer time and money when it comes to dealing with the various banks and investors.  An experienced real estate professional can save a buyer this same time and money by securing information on the back taxes, if applicable, and on liens such as those from homeowner associations. 

Buying at auction:  Some of the best deals can be found at auction.  The banks and investors selling properties through auctions may sell them for 60-70% of the property value just to get them off their books.  Generally, the buyer will need at an earnest money deposit of at least 5% of the purchase price down on a winning bid.  The actual closing of the sale may take longer but most closings are completed within 60 days.  And one of the best thing with auctions is that the back taxes and/or liens are normally cleared up beforehand.

Buyer Beware.  Foreclosures can be a great opportunity to build equity and make money but a novice buyer can end up wasting a lot of time and money too if the homework is not done.  Consult an experienced real estate professional.