I spent most of the day today learning as much as possible about foreclosures. Unfortunately, it's become clear that we're going to continue to see a lot of activity in this area. While I have a basic level of knowledge on the subject, I obviously will need more indepth knowledge going forward.

The class was taught by Phil Drew at Carteret Mortgage and it was excellent! Not everyone who knows their subject matter is able to convey it effectively. But Phil is clearly a gifted teacher.

What I really appreciated today was the detailed information on how to help your clients avoid foreclosure in the first place. A great deal of the class was spent on this. And while there are lots of details and an involved process, the most important thing to know there is to start as soon as there's even a hint of a problem. Early intervention clearly makes a big difference here.

From what I've seen most consumers who end up with a problem know woefully little about any of this. And, too often, the real estate agents they could potentially turn to don't know much more! Perhaps there's been no training in this because the market was so hot for so long everyone forgot what can happen. But I'd like to see an effort to make some kind of training on this subject part of the curriculum for every real estate agent. And I'd like to see it early in their careers.

Now is the time to work on this. Right now I know my peers agree with how much we all need this information and how much earlier we wish it had been available.  But the urgency will fade quickly when the market changes again.

In the meantime, I'm now in a much better to help clients who are worried about the possibilities of foreclosure. I have a better grasp of what negotiating strategies are effective with lenders, how to better protect my clients credit rating as well as their financial position after the house is sold or foreclosed. I'll never feel good about having to use this information. But I'm very grateful that I'll be better help to my clients when they need it!

We've talked a little bit here about what to do if foreclosure seems to be looming as a possibility. And if anyone you know needs help in that area I'm happy to talk with them privately and see what I can do.

But what about if you're a buyer and decide to buy a foreclosure? Is the buying process any different? And, if so, how? With the increasing numbers of foreclosure properties available for foreclosure it seemed like a good time to discuss the possibilities.

First of all, you should expect a good deal on a foreclosure. Note that I didn't say you should expect a "steal!" Financial institutions really do not want a large inventory of unsold homes sitting on their books. And they will do what they have to in order to get them sold. I showed a property in foreclosure last weekend where it was priced over $100K below a very comparable property just two doors down. The main difference was that the other house was not owned by a bank!

You should also know that the property you're buying is almost certainly being sold in "as is" condition. That doesn't mean there's anything wrong with it. But it does mean the financial institution is not going to allow you to write an offer contingent on a home inspection. They want a solid contract with no loopholes and they don't want to have to negotiate getting the garbage disposal fixed! If you're considering buying a foreclosure you'd be well advised to have an inspection done before putting an offer on the property.

You should expect a more cumbersome buying process. In most cases, buying a foreclosure will entail additional paperwork. Exactly what that includes will vary with the lender involved. But make sure your real estate agent carefully reviews any additional addendums with you. You need to understand everything you're agreeing to.

And, you should expect this process to take longer than usual. While it's not at all unusual to fax an offer on a property and receive at least a verbal response within 24 hours, that's definitely not the case with a foreclosure. Be prepared to be patient! You will likely wait quite awhile for an answer as to whether or not your offer is accepted.

One last thing to be aware of. It is becoming more common for the financial institution that owns the property to insist that the new buyer use them for financing. Ask your real estate agent about this as soon as you identify a foreclosure property you're interested in. It's best to go in knowing what's required. If you're interested in a property with this kind of stipulation, I'd recommend qualifying with another lender first so you'll know whether you're getting a fair shake from the lender who owns the home. If you really believe it's not a good mortgage program for you, try negoitating on that point. Remember, they do want to unload the house. You may be able to either get more reasonable terms or persuade them to let you use your own lender.

Remember, you don't get if you don't ask!

Foreclosures can be a terrific deal. But you need to know some of the differences you're likely to encounter in the transaction. Surprises during a real estate transaction are hardly ever a good thing!