The terminology is important. In today's market you want a REO (Real Estate Owned - in banking term), we sometimes call it 'Bank Owned'. It's alreay been thru the foreclosure, trustee sale... yada, yada. process. The bank owns it, you have a clear title, no one is living in it, you can inspect it before you put in an offer, and you have 17 days after the acceptance to have professionals inspect it for you.
The MLS just added a new field so they are easy to find. Try using my buyer/seller toolkit at http://www.InteroRealEstate.com/JBateman and select 'Bank-Owned/Reo' in the 'additional listing info' box.

Hi Andrea,
My name is Allyson, I do specialize in bank owned and short sales property purchases. Some of the risks involved are usually that the property you purchase from a bank needs work. You have to pay for your own inspections as well as you may have to have the power and water turned on for these inspections ( you are also required to pay for those too) so when you are looking at forclosed homes be sure you understand that you will need additional funds to get the property in shape to be lived in and that you have calculated the costs. It is still worth it as you can find some excellent deals going on right now.
If you would like additional information or help just email me at allyson@homesbyallyson.com or call me at 408-705-6578 you can also log onto my web site athttp:// http://www.homesbyallyson.com and check me out or put in a search.

Sincerely,
Allyson Alessandrini
(408) 705-6578
allyson@homesbyallyson

If you work with a real estate agent none. You have an inspection & appraisal if there are any problems with the home you would know thru the publised reports. ANOTHER UPSIDE you located a home with equity!
http://www.lynn911.com http://www.homes-for-sale-dallas.com

Andrea,

My 2 cents:

1.) Clear Title - specifically to IRS liens ( I agree with Arn on title insurance)
2.) Physical State of the home - AS IS - Cost of doing your own inspections and true estimates for repairs.
3.) Emotional bidding at a Trustee Sale ( or before) that lands you paying more for the home than it is worth.
4.) Previous owner still being on the property when you get the keys and going through the cost ( although relatively low) to evict.
5.) Time. Not the fastest process in the land so patience is a must.

There are some great deals in foreclosures but make sure you are working with an agent that knows the area so that they can help you define the truest value. Also know your risk profile for buying AS IS and a home that may be part of a potential bidding frenzy

Good luck,
CJ

Whne purchasing a foreclosed home you need to invest in a good home inspector. The average cost of home inspections vary from area to area, so shop around for a reasonable price. When hiring an inspector be sure to request his qualifications and experience. It is also a good idea to ask to review a report so you are aware of what he is liable for checking and what he does not inspect.

The biggest risk--house prices still continue to fall drastically in CA. For example, you buy a house, you think it's a great deal for 350K. Then next year it's only worth 275K. You are now underwater, and will not be able to sell you house unless you have 75K (350K-275K) to bring to closing with you. Of course, if you find yourself in this situation, I guess you could just walk away, like thousands of others people in CA. So maybe there is not that much risk. The bank takes most of the risk for you. I guess that's why the financial system in the US is collapsing. Good Luck

Hello Andrea,

When buying a property going into foreclosure or short sale I recently had a escrow fall out as the seller kept trying to get more time to stay there as they claimed to not have the funds to move. It also dragged on. If you are buying a property at a foreclosure sale then you risk not knowing if their are other liends on the property.

Best,

Monique Carrabba
The Reavis Group
Keller Williams Wilshire
mcarrabba@kw.com

Andrea:
The risks associated with buying a foreclosure property are two fold.
One is clear title to the property and the other is condition and lack of disclosure.
Do not buy any home and especially a foreclosure without getting title insurance.
The title company will insure that the entity selling the property has the right to sell you that property.
If the title company misses something, they will protect you and pay any other claims on the property.
On a foreclosed property, the former owner is probably long-gone and the entity which owns the property has no idea of the condition of the property. To protect yourself, I would have the property professionally inspected by a termite and a general home inspector. If you can make this a contingency of your offer, great. If you can not, go ahead and have the inspecitons done prior to making the offer.

Let me know if I can be of any further assistance. Arn

If it is fully foreclosed, the biggest risk is that the owner (the bank) knows very little about the property and will be selling "as is". The property may have been vacant for some time, and may have damage. You can mitigate that risk by making an offer considering condition, making sure you have an inspection contingency in your offer, having the full inspection done, and understanding the findings. You may need to seek financing that includes repair/rehab costs. You should also buy title insurance when you close.