Sourcing a Good Foreclosure Deal

While the newspapers and television shows are full of stories about the great deals to be had on foreclosed properties (for those who can afford to take advantage of these hard times), there are a number of elements to consider before jumping in to what seems like the bargain of the decade.

How to find the deals:

These foreclosure situations arise for a number of reasons - the owners have lost their main source of employment and cannot maintain the mortgage payments, or property taxes have not been kept up to date. Do your own research, in conjunction with a realtor who is familiar with foreclosure properties in your area. The realtor may help you avoid properties that are not worth the price, even if it is a distress situation.

Check out local free lists of foreclosures, bank-owned properties or short sales. These properties may go quite quickly in the competitive, bargain-hunting world of real estate today. Some homes will be snapped up within one hour of being put on the market.

Be ready to buy:

It is essential to be ready to move when the right deal comes along - including having a pre-approved mortgage and a strong down payment. When a property is bank-owned, the faster it can get the home off their books, the better it is for them. But also realize that they are not in the business of giving their assets away completely.

One benefit of buying a bank-owned property is that all the liens and back taxes should have been removed.

Be sure to get an inspection done before purchasing. This could avoid unforeseen costs after the deal goes through.

Know if this property is the one you want. This is where your research is crucial. On a quick foreclosure sale, you don't often have the luxury of time for mulling over details such as square footage or proximity to shopping and schools.

What's the catch?

In some cases, a deal may be struck with the current owner, such as taking over the payments. This would include not only the property, but all of the associated debts and requirements for repairs.

Some homes may be in a state of disrepair due to neglect by previous owners. In some cases, anger and frustration at the impending loss of their home caused the owner to punch holes in the walls or otherwise damage the property.

If the property being purchased is a rental unit or home, and currently has tenants, you may be responsible for legal fees if you want to evict them.

Always ensure the property taxes are current.