The foreclosure market has long been appealing to the bargain hunting prospective home buyer. Buying a property that has been foreclosed on can be a good investment, but may not be quite the deal that people believe it to be.

Lenders are in the business of making money; the fact that a homeowner can't meet the obligation of payment on a property becomes a problem for the bank and can become expensive. Once a lender has gone through the process of foreclosing on a home and has met specific criteria, the home can be placed on the market. While the list price is often somewhat below market value it will not be sold at a ridiculously low price.

Foreclosed homes typically sell as is. If the lender does work to the home it is generally done before placing it on the market. When setting the sale price on a property, the lender does an assessment of the property's condition and sets the market price accordingly. Buyers in the foreclosure market should be aware that they will be financially responsible for any required repairs and though it is not the rule, it is hardly the exception that a foreclosure property will need some repair work. In addition, banks do not disclose issues to buyers, as happens in a traditional sale. The home inspection is invaluable in a foreclosure purchase.

It is important that foreclosure buyers be prepared to act quickly once they find the right property. The foreclosure market is fast once the property is listed; other potential buyers are likely looking at the same types of properties, getting an offer in as soon as possible is key to success. Lenders look for buyers that are preapproved so that the process can move swiftly, they want the property sold as quickly as possible and a preapproved buyer already has their lenders sign off.    

Buyers need to do their homework on the home's location. While it doesn't stand true of all foreclosed properties, some may be located in areas that are not in keeping with the buyer's desired location. An attractive price tag should not be the sole deciding factor when searching for a home. It is important that the buyer ask their agent for a price comparison of homes selling in the neighborhood. It is important to hold the value of the property up against competition. 

The inventory of foreclosed property remains fairly high now that most lenders had begun putting properties on the market again and the properties turn over rapidly. Foreclosures can make for a sound investment, provided that the buyer is prepared for a project.

I'm a real estate professional covering Essex County, and Middlesex and Suffolk counties working with buyers and sellers alike. I have a background in construction. My aim is to help you reach all your real estate goals. Contact: Phone 978-726-5062, email kroy@ghsre.com.