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How to buy a foreclosed home In a foreclosed deal, it’s buyer beware
House with a bank owned sign out front
SIGN OF THE TIMES   The mortgage crisis has put more foreclosures on the market, but buyers need to be careful.
Though there are a lot of bank-owned properties available these days, trying to buy one can be risky. With a conventional home purchase, you have all sorts of protections against being taken, but in a foreclosed deal, it’s buyer beware. Here’s how to investigate a foreclosed home:

Skip property listings that charge a fee. Most foreclosure Web sites charge for their listings. But you can get information on foreclosed homes in your area free from local agents. Call local brokers and talk to the agents who specialize in foreclosures in that office.

Banks may put their foreclosed homes up for bidding at auction or simply turn them over to a real-estate broker. If the property has been on the market for less than 30 days, lenders are usually looking for full-price offers. After 30 days they may be willing to accept a lower price. After 60 days you can offer even less.

Pay for a detailed home inspection. This is always a good idea when buying a home but especially so when buying a foreclosed home. Vandals may have stripped fixtures and appliances. What’s more, the utilities have probably been shut off, making it impossible to gauge the shower pressure or test for leaky pipes. If that’s a concern, try to negotiate to have the utilities turned on for inspection before you close on the home. A home inspection usually runs from $250 to $400 and can save you a lot of money if something is wrong with the home’s structure or systems. You need to know what repairs you’re on the hook for to determine whether the price is fair.

Beware: A "sale" might not be final. Don’t rush out to buy furniture. Some states have a redemption period that lets the original homeowner satisfy his or her debt and take back the foreclosed home during a specified period after a foreclosure. For example, a homeowner facing foreclosure because of unpaid homeowners’ association fees might have up to 180 days after a foreclosure notice to pay the fees and reclaim the home, even if it has been “sold.”

Have patience. Banks may take 60 days or more to decide whether to accept your offer on a foreclosed home. “We see a number of these deals fall through because buyers don’t want to wait,” says John Anderson, a real-estate agent in Minneapolis.

Consider title insurance. Even if you aren’t getting a mortgage, you might want to buy title insurance as protection against liens that weren’t disclosed or discovered. It also prevents someone like an ex-spouse of the previous owner from making a successful claim on the home after it’s sold.

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