Things to watch out for when buying a foreclosed home

To many people want to run and buy foreclosures before they know what they are doing. Buying foreclosures can be a way to make money and it could be a way to lose your life savings, so be careful before buying foreclosed homes. This article will give you some legitimate ways to find foreclosed homes and what to watch out for.

First consider many things here and please understand the differences. Short Sales are usually homes in foreclosure, but not foreclosed homes. You can buy a short sale, but at slightly less than market price. There is no way for an investor to make money buying short sales, as they must appraise. The banks will not sell the home for less than what they could get elsewhere. They will choose to let the home foreclose and place it back on the market theirself.

A foreclosed home is one where the owner has already lost the home and it is being auctioned on the court steps or available through many sources. A foreclosed home may still have the owner inside the home and you may have to evict the owner. A foreclosed home is not open for inspection, so the most you get to see if by a drive-by. Now, if you are buying a bank foreclosed home, they have already evicted the tenant and have raised the price to accommodate cost involved in the transaction.

The best buy is on the steps of the courthouse, but you must take the responsibility for the repairs, evicting the tenants and even paying off the 2nd and 3rd mortgage. So it is necessary to hire an attorney to protect yourself. When purchasing a foreclosure on the steps of the courthouse, you need to have a fairly large down payment ready to give them on the spot and your financing already set up.
The funds must be in the form of a cashier's check. If the second is owed money, they will be on the steps also and you must agree to pay them, so purchasing a foreclosure is not all that easy. You need to have searched the title prior to the sale to look for all liens to protect yourself.

Where can you purchase foreclosures:

1. Contact a reputable Broker. Especially in todays market, there are tons of Brokers or Realtors working foreclosed properties. They will have a list of all available foreclosures and can help you protect your savings and yourself.

2. HUD homes for sale. You must go through a Broker to buy a HUD home, but you can search the listings yourself. You cannot bid yourself. You must be represented. HUD homes generally go on the high end, but have low down payments and quick financing.

http://www.hud.gov/homes/homesforsale.cfm

3. You can contact any Bank and ask to speak to the REO department. This is also called the loss mitigation department in some banks. Ask for a list of properties for sale and they will help you. They may want the loan with their bank, but that is no problem if you are qualified.

4. You can contact the US Marshall's Office. These homes were taken because of drugs, firearms or alcohol and they have a list available for sale. 

http://www.usdoj.gov/marshals/assets/nsl.htm

5. You can contact the VA. They have many homes for sale and some homes for as little as $1 down if you qualify.

http://www.homesales.gov/homesales/mainAction.do

6. The IRS has foreclosures also. These homes have been repossessed due to tax liens. You can get a list of properties from them also.

http://www.treas.gov/auctions/irs/cat_Real7.htm

As you can see, there are many safe places to buy foreclosures. If you are a learned investor and know how to do the foreclosed property route on the court steps, then those are your best buys, but if not, try some of these links to protect yourself.