HGTV FrontDoor's Foreclosure Tricks and Treats

By Annalisa Burgos, FrontDoor.com | Published: 10/06/2009

Looks can be deceiving. A foreclosure that looks good from the outside may still require extensive repairs.

Navigating today's housing market is like trick-or-treating. Treats are in large supply and freely given out, but tricks lurk around some dark corners. Homeowners and buyers alike should be careful they aren't tricked into situations where they end up losing time and money, especially in the foreclosure market. In real estate, a trick can cost you more than a toothache.

FORECLOSURE TRICKS TO AVOID

Trick #1: Every foreclosure is a bargain.

Don't get tricked into buying a money pit. A foreclosure property with a low price tag may seem like a bargain, but if you don't do your research, it could quickly become a money-draining nightmare. Insist on a home inspection and look up tax and lien records to uncover potential problems. The true cost of the home should include any repairs and improvements you need to make.

Know the pros and cons of buying a foreclosure >>

Trick #2: Buying a foreclosure property is like buying any other property.

Don't get tricked into thinking that the foreclosure buying process is the same as the traditional process. You shouldn't work with just any real estate agent. Find one who specializes in distressed properties. Depending on what stage of foreclosure the property is in, you may not deal with the seller or a listing agent at all. You could be dealing with county officials at a courthouse auction or with the bank that owns the property.

Because of the multiple parties and specific laws involved, a foreclosure deal is much more complicated than a traditional one. While it typically takes 30-45 days to close, a foreclosure sale could take three to six months. So if you need to buy a home quickly, keep your options open -- a foreclosure or short sale may not work for you.

Know the challenges of buying a foreclosure or short sale >>

Trick #3: Going into foreclosure is better than paying a mortgage you can't afford.

Don't get tricked into giving up your home if you're having trouble making your mortgage payments. Foreclosure has major legal, tax and credit consequences, so exhaust all your other options first.

As soon as you know that you'll be struggling financially, contact your lender to discuss possibly modifying or refinancing your loan. Don't be afraid to open letters or answer calls from the bank. Go back and review your mortgage documents. The sooner you work out an action plan, the more likely you'll be able to keep your house.

Know the 7 steps to avoid foreclosure >>

NEXT: Foreclosure Treats to Take Advantage Of >>

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