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We bought a foreclosure. The bank had already done a ton of work, and then our inspector found a few other issues. The bank was willing to do them all (including a new roof). It helped that our bank said "you can't buy this house until they put on a new roof" so it kind of forced their hand. We haven't and any issues with it that either 1) they could possibly have known about--sewer and water line issues, but there's no way for previous owners to have known or 2) aren't normally expected. I will say the painting job was...weak (they didn't take down curtain hardware to paint, so when we removed, we had to paint), but that's a pretty minor issue. All in all, it was an easy and smooth process. Good luck!

If it's a homepath home, check out the FM resources online - they are really good detailing out homepath. In order to be a homepath property, they have to meet certain criteria (info is available on the FM Homepath site, which is really detailed and good!) and a lot of times FM will do a lot of the bigger ticket work on homepath homes. This was the last at least a couple of years ago, I'm not sure if they've changed their criteria.

Be aware that the pictures online may not be recent, or be really representative of the condition of the house. We looked at a foreclosure recently (to buy as investment property) and it turns out that the pictures they had online were taken in 2012!!! Needless to say, there were serious issues that were not apparent from the old pictures, or from the disclosures in the listing (severe mold being one issue). They also didn’t list pictures in the ad showing where the ceiling was caved in ... small details lol

@photojane:

Foreclosure purchases are great options, but one thing I would counsel you about, if the bank hasn't already, is that most residential foreclosures are subject to a right of redemption on the part of the homeowner. That redemption right means the homeowner can buy the property back, even if it's been sold by the bank.

So you need to make sure that statutory period has passed before you buy. Sometimes banks hold the property for that period before they sell but sometimes they do not. For example, in the state where I live, the right of redemption period is one year, meaning that from the date of the foreclosure sale until 365 days later the original owner has a right to purchase the property for the amount owed on the property. This is regardless of whether you bought the property and put $$$ into the property. The risk of the original owner being able to do this is usually low (otherwise they wouldn't have allowed the home to be sold) but it is still a risk.

Also, banks are usually really happy to unload these properties and I would negotiate the heck out of the price to get it as low as possible. Banks don't want to hold these properties if they can help it.

We bought one. We looked at a lot of forclosures and many are not represented correctly in the pics so just make sure to see it in person before getting your hopes up too high. And be prepared to pay more than list price. Although the house we bought we got for the exact list price ( we did offer less and the bank rejected it but they paid all closing costs) we also put offers on other forclosures that we lost because they went for quite a bit more than list. There were no surprises because we had a home inspection, and our lending bank. Was very thorough in inspecting the house as well and requires some things be taken care of before closing. FX that you find a great home! Ours was a great experience.

We put offers on two different foreclosures during our house hunt. Definitely get in there in person since the pictures can be deceiving. Also try to get a good feel for the market and work with a good agent. We lost the first house because we didn't bid high enough, even though we were definitely willing to go higher. Our agent kept insisting that it wasn't necessary. He laughed at us when we asked to put in an offer over the list price (we were willing to go 20k above, he brought us down to 1k above, and it went for something like 9k above). Needless to say, we ditched him soon after. The second house was priced super low and we bid at least 10k over list and the final sale price was like 20k beyond our offer. So depending on where you are buying (I live in a place where the market is hot), the list price may also not really reflect what the sale price will be at all.

Our house was a foreclosure. It was sold as is with the bank clear about fixing nothing, no matter how bad. I'd definitely encourage you to get a number of inspections before purchasing. We were lucky regarding the condition of our home but many find unexpected issues after they've bought it if they haven't done their due diligence. Best of luck!

My husband and I have bought 2 homes that were foreclosures. We love being able to fix it up and customize our home. Most homes on the market are out dated. You'll gain equity on it. When we sold our first home, we earned about $35,000 after our loan was paid. It's a great option if you can afford fixing it up yourself.