Buy a Foreclosed Home And Save Big!

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"The affordability factor or the ease of the ability to buy today are higher than we've seen in probably 25 years," Mattison, of The Mattison Group, noted.

"It makes me feel good at the end of the day to be able to help everybody," Hodge said.

That's one of the silver linings of the recession.

The key is to work with real estate professionals who have experience with foreclosures.

Never skip the home inspection, because unoccupied houses can develop unusual problems.

And purchase a quality owner's title insurance policy in case somebody comes along later and claims the house is theirs.

More Advice for Buying a Foreclosed Property

There are two main junctures at which you can purchase a foreclosed property: on the courthouse steps when it is being auctioned off to satisfy the debt owed to the mortgage company. Or after that same bank has bought the property back itself in order to recoup its investment.

This second is known as a bank-owned or "real estate owned" property. You can also buy a property before the bank forecloses, usually in a short sale situation, where the homeowner is trying to sell it at a discount to avoid foreclosure. Since the bank has not yet foreclosed, this is really a different sort of transaction, with lots of messy complications as the homeowner tries to save -- and possibly stay in -- their home. So, for the purposes of this article, we will just cover the other two options.

Auctions On Courthouse Steps

You hear the phrase "auctioned on the courthouse steps" frequently, but the truth is, not all courthouses have steps and not all of these auctions are conducted at courthouses. Some states hire professional auctioneers and ask that the auctions be held at the auctioneer's office. Others allow them to be held on the premises of the property being sold. Additionally, some of these auctions are conducted by professional auctioneers, while others are run by the local sheriff's office and some are handled by attorneys.

If you are hoping to buy a property at one of these initial auctions, where the bank is repossessing the home from the mortgagees, it's a good idea to attend several and get a feel for how they work before you actually bid. Keep in mind that many -- even the majority -- of these auctions are canceled at the last minute when the homeowners somehow work out a deal with the bank. So try to re-check listings before heading to the auction site.

Typically you cannot get inside to see the property, but here is one helpful hint: if the property changed hands in recent years, there may still be photos and details archived in the Multiple Listing Service that real estate agents have access to. So ask licensed agents if they can conduct a search for you.

Bank-Owned Properties

Industry experts say bank-owned properties are already marked down 20 percent to 30 percent compared with other homes in the neighborhood, so you may not have much luck making a lowball offer of even less. However, if the home has been on the market a long time, your chances are better of talking the price down. It helps to know if there are other liens against the property for homeowner's association dues, property taxes and so on, because then you can calculate how much the bank needs to get out of the property to break even.

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