Hi Diane.

No one seems to really be answering your question so I will. You may find some mis-information on Trulia and other sites since they aren't very direct about Foreclosures. Realtytrac and Zillow are usually unreliable sources for home values because they pull data from the public record and not always from the MLS.

On the public record, at least in California, when a property is "bought back" by the bank it shows as a transfer of title from the home owner to the bank. These sites confuse the issue by calling this a sale when it really isn't.

When you think about it, the bank owns most of the property because they usually have most of the equity. When the bank forecloses on a property it has the choice to either sell it to the highest bidder or take title to the property, which was previously held by the home owner. Whatever the amount of the outstanding loan is at the time a bank takes title to the property, whether it is $5,000 or $500,000, is what these sites confuse as the sale price. A sale never really occurred.

It is in your best interest to try an distinguish these from actual sales as it will change your image of the market. When the bank takes title, they receive (in California) a trustee's deed. When the property is sold to someone other than the bank at auction, the are given a Sheriff's Deed (in California). These may be different in your state since not all states in the US are trust states like California. You can usually get this information for free at the county superior court for free, but if you would like to save yourself a trip call a local Realtor.

I agree with the others. I've seen foreclosures with 8 good contracts on the table and the bank took so long (over 6 months) to get around to doing anything on the house that, they threw all 8 contracts out, relisted with another realtor and started all over again. I've seen others move in a week.

When someone can't make housepayments, they typically don't have money for preventive maintenance or routine repairs. In addition, we often see where EVERYTHING that can be taken out and sold has been - from water heaters and central a/c units to the toilets and light fixtures. While I've seen a few foreclosures that literally looked like someone had been rehabbing them yesterday and then walked out the door and left them (which does happen when investors buy properties, rehab them and then can't sell them), but those are very rare. You need to be aware that buying a home that you cannot immediately move into and live in will affect the loan that the bank will give you. You may have to keep your current home for awhile to live in, while you do the necessary repairs to the foreclosed home (which you can't start on until you own the home), and the bank will probably give you a rehab type loan where they give you the money to buy the home right away, but they evaluate the home for it's future value and they have you approved for up to that amount. Then as you do the work on the home, they will come and inspect the home and make sure that the work was done correctly, then they will loan you the money to pay those bills, then you do some more work and as they verify that it was done, they will give you the money to pay those bills, etc. Some types of loans, however CANNOT be used with foreclosed homes (like FHA and VA loans).

When you buy a foreclosed home, you are buying it AS IS - the bank will not warrant anything and they will not do any repairs. You will also need to be very careful because some of the banks will not give you a full warranty deed to the property, which means that you may inherite back taxes, mechanic's liens and other bills that you will have to pay off before you can get a clear title to resell the home in the future (and you always have to worry about those creditors)

You need to sit down with a knowledgeable Realtor and seriously discuss in person what to expect with a foreclosed home, a short-sale home (the bank agrees to take less than is owed on the home and the homeowner still owns it ) and HUD homes.

Yes! You can even get a foreclosure home for LESS than asking price! I've even worked deals where the bank will pay closing costs! The question you really have to ask yourself is this: Do I really want a foreclosure home? If you haven't been inside a foreclosure, many are trashed. You'll probably have to do quite a bit of work to bring the home up to liveable. Usually you'll have to replace carpet and vinyl floors and sand and stain hardwood floors. You're going to have to repaint nearly every room and may need to repair holes in walls. And that's just the cosmetic stuff! You'll want to hire a home inspector to check out the appliances and HVAC etc to see if those things need to be replaced. The real kicker is that if there is anything at all wrong with the home that you can't live with or can't afford to repair yourself, then the deal is off. The bank will not do repairs. You may also have to cut through the bureaucracy of the banks. It often takes several days to hear a response to your offer and could even take weeks to get all the paperwork back once the offer has been verbally accepted. I have even had deals where the bank couldn't close on time and the buyers waited three months to close and get possession. Now that's an extreme case, but buyer beware! If have the time and patience, and you have the money to fix what needs done, then yes you can get a really great home for cheap! There are exceptions where the family actually did take care of the home and there is little to do except move it, but that is really pretty rare from my personal experience. I say, go find a good Realtor, get approved for a morgage and go out looking at foreclosure homes. Once you've seen a few, you will know if this is something you want to go further with or just back off of.

They may be that cheap but you have to look at all debt outstanding not just morgage. For example if the neighborhood has homeowners dues there may be back payments that have to be paid, there may be back taxes. Hire a professional familiar with the process. Good luck!