With all of the economic troubles the country has been facing, it should come as no surprise that some savvy investors have been taking advantage of some great real estate deals. As housing markets around the country have reached lows that haven’t been seen for years, many experts agree that there has never been a better time to purchase real estate. Luckily, you don’t have to be a millionaire or a real estate tycoon to take advantage of these great prices. In fact, if you are simply looking for a great home for you and your family, purchasing a foreclosure just might be the answer. By following these five simple steps, you may soon find yourself living in the home of your dreams at a price that fits your budget.

Step #1: Decide Where You Want to Buy

There are many great foreclosure properties out there to select from. If you don’t have your heart set on living in a certain area and you are simply looking for the best foreclosure markets in the country, you might want to consider one of these top foreclosure markets:

• Greeley, Colorado
• Detroit, Michigan
• Miami, Florida
• Indianapolis, Indiana
• Denver, Colorado

Of course, each of these markets is vastly different and the types of homes you can expect to find there will vary significantly. Therefore, you need to consider your current as well as your long term plans when deciding where you will buy.

Step #2: Obtain Financing

Getting your financing squared away before you start your property search is a good idea, as this will tell you exactly how much you can afford to buy. By being pre-approved for a loan, you will also be able to move quickly on the purchase. When it comes to purchasing a foreclosure property, having the money in your hand will significantly increase your chance of being able to purchase the property.

Step #3: Get an Agent

Although it is possible to purchase a foreclosure without the help of an agent, hiring a real estate agent will simplify the process. Not only will an agent be able to help you locate foreclosure properties, he or she will also be able to guide you through the legal process of completing your purchase.

Step #4: Contact the Owner

Contacting the owner of the property can be trickier than you might think, as the process changes according to the status of the property. If the property is in pre-foreclosure, for example, you contact the owner directly. If the property has been put to auction, on the other hand, you will have to place a bid on the property at the auction. In addition, you generally have to pay cash at the time of the purchase. Finally, if the lender or a government agency has taken possession of the property, you will need to contact that agency in order to discuss the possibility of making a purchase.

Step #5: Inspect the Home

It is essential for you to thoroughly research the property you are considering buying. Otherwise, you might be taking on a big problem without realizing it. In addition to checking into any financial liens that might have been placed on the property, you also need to get the property inspected in order to make sure it is still in good condition. Contrary to popular belief, foreclosures are often in excellent condition. Nonetheless, a thorough inspection is necessary in order to know what you are getting yourself into.

After successful completion of these five steps, you are now ready to make an offer. If everything has gone right, you can congratulate yourself on becoming the proud new owner of a great piece of real estate at a bargain price!

Jolenta Averill is the owner of Madison real estate brokerage Lake & City Homes Realty where she assists investors and first-time homebuyers alike in acquiring Madison Foreclosures For Sale and Madison Short Sale Properties. Call Jolenta at (563) BUY-SOLD today to discuss your unique requirements.

I often recommend that short sales be avoided when looking for a home.  One problem has been little standardization of the process.  Banks have had no consistency in dealing with sellers and short sale offers and even finding two listing agents who process offers in the same way has also been a challenge.

Two government programs are attempting to streamline this process – HAMP (Home Affordable Modification Program) and HAFA (Home Affordable Foreclosure Alternative).  The primary objective of both of these programs is to help qualified homeowners avoid foreclosure and modify their loans when possible to keep current homeowners in their homes.  Get more information on both of these programs at the official government site:  MakingHomeAffodable.gov

Guidelines that went into place in early April is starting to put some structure into the short sale process.  Structure though does not mean simplicity as there are 45+ pages of documentation.  While now there are some specific time frames for lenders who chose to participate in this program, many of the details are still left up to each individual company in how to implement the program.  This means that there will still be no real consistency when working with short sales.  Bank of America does not have to have the same requirements as Wells Fargo or the local credit union down the street.

While there will be some structure in the new program, it is likely that some uncertainty will remain in terms of a resolution of offers.  Many buyers have voiced frustration in the amount of time that often passes before they have a resolution on their offer.  Until the processing time of short sale matches other distressed properties, most buyers will still be better off  avoiding short sales.

Next time – What should you look for when considering putting in an offer if your only choice is a short sale listing?

Hot topics this month include:

• End of the Federal Tax Credit – buyers must be in contract by April 30th and close escrow by June 30th to qualify for either the first time homebuyer credit or long time owner credit
• California is offering a homebuyer credit both for new homes and existing homes to certain qualified buyers – however, that money is only expected to last a couple of weeks as there is a cap on the amount of tax credit money allocated for this credit.
• FHA continues to be a popular funding source for many buyers – even though the program guidelines have tightened some this year
• Wondering what an appraiser looks for in a house for an FHA loan – here’s a good post by Ryan Lunquist, a local appraiser
• The market in Davis has had a strong start of this year, likely helped by the Federal Tax Credit
• Market in greater Sacramento region ranks 3rd in the nation for the highest percentage of distressed sales.
• While the region has high percentage of distressed sales, home sales have been strong with homes priced regionally under $300,000 selling quickly many times with multiple offers.

Not all neighborhoods fit nicely into categories, let me know if you have questions about any aspect of the real estate market, I’m happy to provide you with any information you need.

Sean O’Toole from ForeclosureRadar.com gives a monthly update on foreclosure related activity around California for March, 2010.

Some key points:

• The foreclosure process from notice of default to the filing of notice of trustee filing continues to increase and that it is now taking nearly 6 months for this process.
• Often the opening bid at the trustee sale is set at 33% above market value to discourage investors from purchasing homes directly at the court house steps.
• Foreclosure sales are up 92% over last year however, much of that is due to moratoriums put in place last year that prevented a lot of banks from proceeding with foreclosures.

While this report is focused on California in general, these trends can be found throughout the greater Sacramento region.  While Davis still finds itself in a fairly secure bubble, foreclosures and short sales are creeping into the Davis market.

The Federal tax credit for both first time homebuyers and qualified long-time existing home owner/buyers on April 30th.  To qualify for the credit, buyers must be in contract before that April deadline and close escrow prior to June 30th.  The extension of the tax credit has motivated a lot of buyers to act while the government is giving away free money.

Starting May 1st, California will have a $10,000 tax credit to qualified first time homebuyers however, the difference will be that it is not an automatic credit, home buyers will have to apply and reserve the credit and it will not be paid back in one lump sum but over a three year period.

The California credit is an expansion of a program last year that was only for first time homebuyers of newly constructed homes, this year there is $100 million in tax credits set aside for new and another $100 million for existing homes.  The program ran out of money within a few months last year so while this credit runs until December, 2010 it is likely to run out of funds before the deadline.

Your personal tax accountant is the best source of information to see if you qualify for either the Federal or State Tax credits.