Today some of us in the office were talking about foreclosures.

Today in the office some of us were talking about all the calls that agents are getting from buyers wanting to buy a forclosued home.  So I'm not going to discuss all the subject here today, but I will hit the high points.  First, there are a number of way to purchase a foreclosure. 

The first way is to buy a home off of the courthouse steps.  In Georgia, a home has to be advertised in the paper for 30 days and then is sold on the courthouse steps the first Tuesday of the month to the highest bidder.  Its an interesting process and well worth your time to see how it works.  This way of purchasing a foreclosure is not for the faint at heart.  The bank that holds the mortgage  on the property will most likely be there and start the bid at what is owed on the home.  In order to bid, you have to have the CASH to close and close within so many days.  Also, you are purchasing the home without seeing the inside. 

The second way is to buy a foreclosure when it goes on the market with the bank or a real estate agent.  Buy purchasing this way, you can inspect the home and see what needs to be repaired.  Most REO properties need some sort of work.  From minor cosmetic to a complete rehab.  So that home that is priced at $80,000.00 and looks good on the outside, might need $30,000.00 of work on the inside.  Some homes are liveable and some are not.  With a REO purchase you most likely will need a pre-approval letter from a lender a minimum of $500.00 earnest money to even have your offer considered.  The REO company will usually not do any repairs on a property or give any sort of allowance, nor will they do any financing.  What you see is what you buy. 

So if your interested in a foreclosure, my suggestion is to get with your lender and get a pre-approval letter, not a pre-qualifying letter.  Start talking to inspectors, so you find one you feel confident with, and start looking around at some foreclosures so your familiar with the condition of the homes.  Also, ask an agent to give you copies of the contracts that some REO companies use.  The paperwork is very pro owner and a buyer not only can lose their earnest money, they also give up a number of rights.  On that note, don't expect to change the paperwork, the REO company won't budge on this.  They simply will move on to another buyer. 

So yes, you can get a good buy on a foreclosure.  You can save anywhere from 10% to 50% on a home.  But you have to be in a position to put a lot of sweat equity or have some cash available to redo the home.  But remember, sometimes you can get caught up in buying a foreclosure.  I see a buyer purchase a foreclosure and say they got a fantastic deal.  When right down the street is a home the same floor plan, completely renovated and when all said and done, a better buy!