In the current real estate market, many buyers are interested in foreclosures, and with good reason. In my market area (greater Sacramento, California), foreclosures are often discounted by an average of about 20% from other homes. So it's no wonder that some 60% of all residential sales in recent months have been properties that the bank has foreclosed on.

Many buyers have heard different things about foreclosures, some that are true, some that are true in other states besides California, and some that are just plain wrong. Let's take a look at some of the common myths and facts about foreclosures so that we can better understand what we're dealing with.

• Myth: Foreclosure Buying Is for Serious Investors Only

  Actually this is partly true. If you're talking about buying a foreclosure at a trustee's sale, when the foreclosure process is "finished" and the bank is sold at a public auction, yes, this is true. California law allows the trustee to require any bidder to provide cash or cash equivalent at a trustee sale, and there is no inspection period. If you're going to be buying "on the courthouse steps", you'd better know what you're doing.

  What this myth doesn't tell you is that many foreclosed homes are never sold at the trustee sale, so they're "bought back" by the bank. These homes make up the bulk of the foreclosures that Realtors® sell, and are called REOs ("Real Estate Owned", i.e., by the bank), foreclosures, or sometimes "bank repos". These homes can be financed. The big differences in buying these homes and in any other kind of sale are 1) The bank will generally not fix items found during the inspection period (with certain exceptions) and 2) the requirements for owner disclosure are also relaxed somewhat, since the law assumes the bank won't know about the property first hand. You still have an inspection period, however, so you can find out what you're getting and cancel the transaction if anything serious comes up.

• Myth: After you Buy a Foreclosure, the Foreclosed Former Owner Can Cure the Debt and Get The House Back

  This is true to some extent in some states outside of California, where most homes are sold using a mortgage and foreclosed using a judicial foreclosure. Such foreclosures are often subject to the buyer's "right of redemption", a one year period in which the buyer can get the house back. In California, the vast majority of homes are sold using a deed of trust, so there is no right of redemption after the trustee's sale.

• Myth: Banks are Desperate to Unload Foreclosures, and Will Accept Almost Any Offer

  What we've found in our area is that it's not so much the case that banks will accept any offer, as that they will discount the property 20% and more up front. In other words, usually most of the discount on a foreclosure is built into the list price already. Because they often represent very good bargains, we found when we ran statistics that the average ratio of what buyers pay to what the home listed for is actually higher in the case of foreclosures than in the case of non-foreclosed homes. This is not because the banks weren't willing to give a bargain, but because they listed the home as a bargain.

• Myth: When You Buy A Foreclosure You Pay the Amount Owed on the Loan

  Generally this is false. When you buy a foreclosure you pay an amount agreed to by you and the bank that owns it.

• Fact: Foreclosures are Sold As Is

  This is true. As a rule the bank will not make repairs on a foreclosure. However, there are some exceptions to this rule. If you present a strong offer, the bank will sometimes pay for repairs that may be required. Lender required repairs are often common on when homes are financed using FHA, for example.

  Generally, you still have inspection period on an as is sale. You still have the right to do your inspections, and we strongly recommend you do. What "as is" means is that once you've done your inspections, you'll decide whether to move forward or cancel, and the seller generally won't do repairs.

• Fact: Foreclosures Are Great Buys

  As we mentioned above, often foreclosures are listed at 20% (or more) of the list price of a comparable non-foreclosed home. Multiply that 20% by $300,000, for example, and we're talking about a savings of $60,000! For being willing to accept a home that may have minor repairs and some cosmetic fixing needed, that's not a bad way to go! No wonder 60% of the homes selling in our area are foreclosures!

Note: The information in this article is provided for informational purposes only, and should not be relied on exclusively to make a buying decision. Discounts quoted herein are averages, and all information here should be discussed with a competent real estate professional who is familiar with your area. Buyer should satisfy themselves as to any information about the condition of their home and obtain competent advice and inspections as needed.

More info on your stop foreclosure information search:

Get Free Foreclosure Advice and Free Refinance Quotes
Get your free on-line foreclosure refinance quote and free advice from foreclosure mitigation specialist in minutes. Compare real offers from top national subprime and hard money lenders... more...

Get Info On Macomb County Michigan Foreclosures Whether You're A Distressed Homeowner or an Investor
When it comes to preventing a foreclosure, individuals that are residing in Michigan have a few options. For example, foreclosures in Livonia Michigan and Macomb county Michigan foreclosures help to illustrate this point. This is because when looking at the statistics surrounding the rate of Macomb ... more...

Stop Your Michigan Home Foreclosures Dead In Their Tracks
The home foreclosures Michigan has to offer can be very beneficial for those who are looking to purchase homes at a very attractive price, all while helping the current owners to avoid Michigan real estate foreclosures. Michigan has unique state laws, including the regulations and options which ... more...

Foreclosures in South Florida In June 2007
First and second quarter of this year the number of foreclosures in South Florida was nearly the same but they have dropped this past month, with Miami-Dade County seeing the biggest drop-offs. There were 6,630 foreclosures in South Florida in the second quarter compared to 6,673 foreclosures in ... more...

Making Dallas Foreclosures Work For You
In November of 2006, according to the RealtyTrac? U.S. Metropolitan Foreclosure Market Report, RealtyTrac? U.S. Metropolitan Foreclosure Market Report the number Dallas foreclosures rose 67%, and the eight counties surrounding Dallas saw a new foreclosure for every two hundred and eighty-six ... more...