Purchasing foreclosures - your opinion

[Jesse Doyle]

I have came across a foreclosure deal with an opening bid of 20k with a recent assessment value of 120k for the property. With that being said I have done some research on the pros and cons of purchasing foreclosures and would like to hear from you all what you think! Thank you!

[Nicholas Miller]

Based on your description this sounds like an auction.com deal...  I would highly recommend not starting with an auction.com deal.  These transactions can be lucrative but are not good for beginners (large deposit, not always clear title, bidding site unseen...).  

If you want to buy a foreclosed home I would recommend starting with a government foreclosure www.hudhomestore.com is where you will find "HUD's" www.homepath.com is where you will find Fanny Mae properties dont waste your time searching realtor.com or zillow to find REO's go straight to the source.

Pros for beginners

1.  Owner Occupant Priority aka "exclusive" (hud) aka "first look" (homepath) if you are willing to live in the home for at least one year you get a 15 day head-start ahead of investors.  So if the deal of a lifetime pop's up and there is $20,000 in equity all you need to do is live there for a year, refi the home to get the equity or sell after your 1 year is up....  I bought my primary residence 18 months ago as an "exclusive" buyer...  Previous sale price $108,000 we bought it for $25,000 with about $1,000 in repairs to make it move in ready.  

2.  You know who the owner is - I once looked at a house listed on craigslist and it turns out the guy selling it didn't own it... He had no ownership rights at all. If someone can sneak some fake paperwork past the auditor FSBO's can become quick scams.

3.  Clear Title - HUD and homepath always sell with a warranty deed... If you don't know what that means you really shouldn't be looking at other kinds of distressed properties.

4.  Sell the home before you own - google simultaneous closing

Once you get a few deals under your belt check out 

www.homesteps.com  Freddy Mac

http://www.resales.usda.gov/resales/index.jsp USDA