Housing Crisis Upside: Bargains for Everyone

Deal or Money Pit?

This 960-square-foot, three-bedroom home in Chicago was purchased by the current owners in 2005 for $185,000. It first went on the market in August for $284,500 and is now listed with Inter-City Realty for $99,000. The company advertises: "Owner motivated. Make an appointment today."/Courtesy Inter-City Realty.

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Banks, overall, are getting better about getting foreclosed properties on the market as they finally establish a set of local brokers to move the homes, said Glenn Kelman, the president and CEO of online realty company Redfin.

But Kelman also warned that consumers shouldn't expect much in the way of frills when they buy a bank-owned home.

This 4,400-square-foot mansion in Cincinnati needed some repairs. It sold for $38,416 at auction even though it was valued at $274,500. /Courtesy www.Bid4Homes.com

"They're not going to fix anything for you. You're going to have to buy it as is," he said. That, he said, can be "a nightmare."

Lashinsky knows of foreclosed homes that were purposely trashed by their previous owners. In one case, a San Francisco Bay-area home had its plumbing ruined after soon-to-be-evicted homeowners poured concrete into the home's sinks, toilets and drains.

"That's not an unusual example," Lashinsky said. "When people are frustrated and irritated, they say, 'I'm getting kicked out, I'm going to do whatever I want.'"

When buying a bank-owned home, such problems can hit a buyer by surprise. Unlike other home sellers, the banks, he said, are not required by law to disclose the home's deficiencies.