Buying Foreclosed Properties

I had 4 opportunities to work with buyers buying foreclosed properties in 2008.
Foreclosed properties can be good deals for the buyer, but not always. I have seen foreclosed properties listed for higher price than normal market price. The owner of foreclosed properties are often not in town, and do not know the local market well. They normally use a local real estate agent, but not always. Currently in Columbia market, there are foreclosed properties listed by real estate agencies located 2 hours away. A side note, there are rental properties managed by out of town management companies. Why the landlord decide to use someone 2 hours away to manage the property is baffling to me.

In any case, the buyers may get a good deal buying a foreclosed property, but buyer also take on some risk.

Normally the seller would not repair anything wrong that is found by the inspector. Although after inspection, the buyer can back out of the contract, but at that point, buyer has already paid for the inspection. So that is an expense. Also, if the property pass inspection, buyer applying for loans still need to get an appraisal and pay for it.

If the appraisal price is lower than contract price, again, buyer can back out, but by now buyer has spent more money.

It is important the buyer use an agent or do detail research on their own to find out whether the previous owner (before foreclosure) owed anything else on the property.

In Jan. one of my buyer bought a foreclosed property and we found there were a $20000+ tax lien on it. The seller paid for it, otherwise, the buyer would not have bought the house!

In conclusion, buying foreclosed property could be a good deal, but the buyer and agent have to be extra careful.