Buying a good foreclosed home can be difficult

BY AMY HOAK Comments 0
Published: October 31, 2009

CHICAGO — Buying a foreclosure often is appealing to buyers trying to stretch their dollars. It’s finding a good one that can be a challenge.

"The vast majority of the banks don’t want us to advertise them as ‘bank-owned’ because it comes with a negative connotation,” said Ryan Melvin, co-owner of More Realty Group in Las Vegas.

That means no sign on the front lawn indicating the home is anything other than a traditional sale. A buyer probably won’t find a property advertised as a foreclosure on marketing materials, said Melvin, who specializes in real-estate owned properties, or REOs, that have been reclaimed by a bank, typically after an unsuccessful foreclosure auction.

Plus, in some markets, foreclosure inventory is down compared with last year as government programs attempt to keep owners in their homes and banks aren’t putting as many homes on the market, Melvin said. That’s making it harder for buyers to snag a foreclosure.

If you’re considering the purchase of a home that is now owned by a bank, it’s also important to know at the outset just how much work you’re in for — and how much it is going to cost you. Many foreclosures are in various states of disrepair; some of the fixes are cosmetic, but some can be extensive.

Those looking for the best deal probably shouldn’t rule out non-foreclosure properties, either, said Mark Goldman, a mortgage broker with Cobalt Financial Corp., and a real estate lecturer at San Diego State University.

One option for finding foreclosure listings: Go straight to the bank.

Lender Web sites, such as those operated by Bank of America, Chase and Citibank, will list the properties the financial institution has reclaimed. To find a list, simply do a Web search for REOs and the name of the lender. For a fee, other sites will hunt down properties for you.

Otherwise, you might want to enlist the help of someone who works regularly with REOs.

The National REO Brokers Association, nrba.com, has a database of brokers. There’s also the REO Network, reonetwork.com, which connects buyers with sellers.

McClatchy-Tribune Information Services