Buying Foreclosed Property, What You Need To Know

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By Melissa Wagner

Story Published: Mar 8, 2010 at 6:39 PM PDT

Yakima - Yakima is one of the top places in the state for finding a foreclosed home. If you're in the market to buy, someone else's lost investment, could be your gain. But you need to do your homework, before you end up with a money pit.

"The foreclosed homes are priced somewhere between five and ten percent below market, so that means they can be a good buy, it's just buyer beware," said Phil Barnes, a REO Realtor with Creekside Realty.

Buying a foreclosed home means factoring in the savings, with the expenses.

Barnes said, " They're going to have to re-carpet, repaint and there's pet odor and that kind of thing."

The buyer of this four-plex will also have to deal with mold. And water damage. The repairs could cost $40,000. But real estate agent Phil Barnes says he's seen a lot worse, " There were even dead animals in the basement and the whole place had to be fumigated."

Once you decide you can get past the mess, then there's the paperwork. You'll have to get pre-approved by the bank that owns that property. But you can finance with anyone you choose. Before a home is foreclosed on, you may also get it in a short sale. This happens when the bank lets a homeowner sell the home for less than what's owed.

" It protects their credit somewhat so it's not as drastic as a foreclosure would be, "said Nancy Nulph, a realtor with Coldwater Bank.

Most foreclosed homes, we're talking single family units, are on the market for about 40 days. That's pretty good compared to other homes taking 120 and longer. But for investors, places like this building are selling like hotcakes. This one went off the market in 24 hours.

Barnes said, " There's a lot of investors out there looking to pick up rental property just because the rental market is strong right now."

Which means you better move fast, but know what you're getting into.

If you decide to go with a foreclosed home you also need a good inspector to check out everything from the roof to the hot water heater. Because once you sign those papers, the house is yours, and every problem that comes with it.

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