The radio spots sure sound good - "I got this great 3 bedroom 2 bath home for less than I paid for my car!"  All you need to do is call their 800 number and they'll send you a list of foreclosures in your area!  You think, hey I'd like to get one of these great deals!  People are getting foreclosed on all over the place!  So you call their number and voila you have a list of homes to be sold at the next auction on the courthouse steps! 

Allright! Um, now what do I do? 

Well, heres a few things you may not have known about these foreclosure lists: 

1.  You are completely on your own buying at the courthouse auction.  There is no one to advise you or help with bidding strategy.

2.  Bidding starts at the level of the lienholder that is foreclosing on the property, usually the mortgage company.  If so, the bidding will start at the amount due to them.  If the home had been recently purchased or re financed the opening bid may very well be higher than the current value of the home!

3.  What you won't know is if there are additional liens on the home that you may become responsible for.

4.  In Texas there is a "Right of Redemption" whereby the foreclosed upon person has up to 2 years where he can basically 'buy back' his own home.

5.  All foreclosure sales are public and seasoned investors know where to look for the public posting of properties to be auctioned.  They will have done their homework and if there is a good deal to be had, they will have a huge leg up in getting it.

6.  All sales are treated as cash sales.  If you win you'll have to be prepared to pay the full price right then and there!

7.  In 99% of the cases you will not be able to examine the inside of a home before bidding on it.  What if it has holes in the wall, or all the appliances have been taken away, or its full of decomposing trash? 

My suggestion is to leave the auction bidding for the professionals, if you want a good deal get with your Realtor and ask about short sales or REO properties. REOs are properties that have been foreclosed on, didn't sell at auction and now are owned by the mortgage company.  This is the time when you really have an advantage over them!  They do not want to hold these homes and only now will they let it go for less than what they were owed.  Short sales are properties that are about to be foreclosed on and the seller is hoping that if they present their lender with a decent offer they'll take it and avoid foreclosure.  Both are more complicated and frustrating than buying a home from an owner/occupant so be prepared for encountering time delays, documentation challenges and sometimes poor communication from the selling party. 

The bottom line in all this is get with your Realtor!!! We are experienced in these things, and work for your best interests AND you don't pay us!  We earn our hard earned commission at closing and are paid by the selling party!

Would you go to court without a free lawyer?  Do not go into any Real Estate transaction without an experienced Realtor!!!