I make my living selling homes, many of them distressed property and bank owned foreclosures. Lenders have hired me to sell their reposssions and I have listed and sold dozens of "short sales," which are essentially pre-foreclosures being sold for less then the current mortgage balance. Yet, I have to ask those of you who say they are "looking for a foreclosure..." why?

Why are you looking for a foreclosure? Of the buyers who contact our firm and profess an interest in buying a home, probably half mention the F-word (foreclosure) as a preference. If a foreclosure sounds sexy to purchase, it isn't. Trust me. 

I do understand that the idea of buying a foreclosure suggests that you got some great deal below market value. However, those who buy foreclosures in this day and age seldom get what we might consider a steal. A home purchased $100,000 below what you might call "fair market value" probably needs about that much in repairs. I can show you the closing data on many of those advertised so-called bargains which may have been priced low, but were in fact bid up tens of thousands of dollars.

And that mythical friend of a friend who bought a $700,000 mint-condition foreclosure for $200,000? Never met the guy. 

Bank -owned homes come with some risk. For one thing, the last owner won't be there to show you how to get the furnace going or how they prepare the central air unit for the winter. As a matter of fact, the prior owner may have taken some appliances and copper piping with them! The bank won't make any repairs, and won't sign a contract with a buyer unless the buyer agrees to close on the home "as is." Once the bank takes possession, they secure and winterize the house, essentially hibernating all the systems and exposing the interior to extreme temperatures and only perfunctory maintenance. Most are in rough shape by the time they hit the market- structural damage, missing pipes, you name it. And unknown expenses after a closing can hurt the wallet. 

Contrast that with a home being sold by the current owner. They have everything running as a matter of practicality- they live there! They know where everything is, how it all works, and in most of the transactions I have closed, will hand off the warranties, list of utilities and service providers they use so the new owner can pick up the ball from there. There is little that is "unknown."

While I am certainly not saying you shouldn't buy a foreclosure, what I am saying is that you are buying a home. A home is where you live, sleep eat and spend time with loved ones. You should know what you are getting into. Foreclosures are not for everyone, and getting educated about the risks and likely expenses is crucial before committing to the largest transaction of your life.