You’re tempted by low prices and this-may-be-my-only-opportunity thinking. The foreclosure discount may certainly help bring that dream home within reach, but it can also come with problems if you’re not careful (and sometimes even if you are). “There’s no one easy way to approach a foreclosure. Just like with anything, it depends largely on the bank, as well as the location, and the condition. Most banks and government entities take really good care of properties; some do not,” says Rebecca Weber, a Huff Realty agent who has worked through the process frequently. “If it’s a listed property, you can walk through it. If it’s selling at the courthouse desk, you may not have that opportunity. And unless you have previous knowledge of a property, seeing it and assessing the damage is crucial.”
Should you choose to proceed, don’t go it alone. “It’s a complicated process that’s not for everyone,” Weber warns. “There are a lot of potential pitfalls—title problems, stolen copper, so many things. And there is no one list of foreclosures on the market. You have to find a real estate agent with knowledge and experience.” If you are game, be prepared to move quickly. “Inventory as a whole has been reduced in the past year, including foreclosed and blighted properties,” she adds. “When good ones come on the market now, they sell quickly.”
A good place to start? Government-owned properties. For their first 15 days on the market, they’re only available to owner-occupants, not large investors. And the FHA 203K mortgage program—which exists to aid the rehabilitation and repair of single-family homes—can help make the financing work.