What to Look For When Purchasing a Short Sale or Foreclosure Home

Short sales and foreclosures - seems to be all we hear about nowadays. And as popular as they are there are some areas you may want to look for when you go to purchase:

1. area/neighborhood - are there alot of rentals in the immediate neighborhood? if so this may indicate a declining area. drive around and get a good "gut feel" for the neighborhood where you will be living. Do people take care of their front yards? Are there many cars parked on the street?

2. schools - be sure to research the school systems if you have children or plan to. Buyers today are very conscious about the quality of the schools their children are attending

3. demographics - what income levels are the residents in the area? what race breakdown? ages? education levels, etc. Finding out this information may help you find an area you feel comfortable moving to. Often times if looking in a particular city the local chamber of commerce is able to produce this information.

4. the home itself - what kinds of repairs are needed? Do you have enough funds to cover them? If not and you are going to live in the home consider an FHA 203(k) loan option to finance the repairs. Are the repairs cosmetic (holes in the walls, worn carpet, broken windows, dated kitchen) or structural (roof or a/c needs to be replaced or foundation issues/cracks, etc)

5. home location - does it back/side/front a busy street? This could affect the resale value, as homes with these types of locations are less desirable due to traffic noise and potential safety hazard if children are around.

6. short sale? if the home is a short sale where is it at in the process,and when does the listing agent expect it to reasonably close? are there 1 or 2 mortgages on the property? Although in today's market banks are moving along at a faster rate than before, to wait 90-120 days to close on a short sale is not totally uncommon.

7 other offers - with the shortage of active inventory on the market, you are bound to be competing against other buyers, especially if the purchase price is less than $200,000. How good of a job is your agent doing of inquiring about other offers on the home in order to help you get the home into escrow at the lowest possible price?