Avoid Pitfalls When Buying Foreclosures

Buying a foreclosed home is no cakewalk. It can be a sure-fire way to lose money for a purchaser who isn’t knowledgeable and careful.

Here are some prime considerations for anyone wading into the foreclosure market.

* Avoid outstanding liens. Make sure the property has a clean title. Any outstanding liens and fees incurred by the original owner will be transferred to the new buyer.

* Bid conservatively. The market in many places is still depreciating. That unknown added to transaction, repair, and marketing costs could sour the deal.

* Beware foreclosure concentration. Prices in neighborhoods where there are lots of foreclosures have declined the most – and prices in these areas are still declining. A buyer should confirm that there’s an opportunity to make money if prices fall another 15 percent.

* Beware the appraisal. If the price is discounted from an appraisal done before August 2007, it is almost certainly unrealistically high.

* Cash is king. Even a buyer with a renter lined up and enough money for a 20 percent down payment needs still more cash to weather another two or three years of a depressed market before unloading the property.

Search Phoenix Area Foreclosures or request foreclosure lists send email to casey@azrips.com

Source: Forbes, Matt Woolsey (08/19/08)