If you’ve been watching the stock market and the economy in general, you might wonder if now is the time to buy a foreclosed home. Will prices go any lower? When will the housing market bottom out and begin the long, slow march upward?
 
“We’re not 100 percent sure that we’ve hit the peak, not as far as numbers of foreclosures,” says Barry Tanner, a realtor with Edina Realty. “I feel that this summer—or this year I should say—is the time to buy these. There are always going to be some deals that are better than others.”

Foreclosed homes run the gamut—from wealthy suburbs to distressed neighborhoods within the Twin Cities. The following tips will help you tackle the tough issues that are unique to foreclosed home purchases.  

1. Having a real estate agent experienced with foreclosed homes in your corner has its advantages: he or she can guide you toward a property for investment or habitation purposes; tell you what to expect if the process takes unexpected twists; and expertly negotiate with banks, sellers, mortgage companies, and other parties that have an interest in the home.

2. A Web search of foreclosed homes will result in an overwhelming choice of sites that offer services along with the listings, but they may charge a monthly membership fee. But keep in mind, Web listings can be inaccurate because there’s no one source charged with verifying foreclosure information. You're better off walking into the county recorder's office, or checking postings in local legal newspapers, such as Finance & Commerce. Foreclosed home listings can also be found on mls.com, a real estate search portal.

3. Foreclosed homes are a less-risky bet than homes sold at auctions or during pre-foreclosure sales. Homes at auction can be sold at discounts up to 40 percent of their market value, however, in the heat of the moment potential buyers can push the home price upward.

4. If you find a house you like, find out how much it’s worth (as opposed to what it’s being sold for). You could check out the property value and taxes, or possibly have it appraised. Many counties provide this information in an online database. For instance, on Hennepin County’s Web site, hennepin.us, you can search for property values and taxes by house number, property identification number, or on an interactive map.

5. Once you zero in on a property, find out about any second mortgages, judgments, assessments, or liens on the property. Inheriting unfinished financial business could make the home more costly. You can do this search in person at the county recorder’s, on the Web (although this may cost some money), or you could hire a title search attorney.

6. If you’ve already been pre-approved for a home loan, ask your lender what criteria a foreclosed home must meet in order to get a mortgage with them. Some lenders won’t make loans on badly damaged homes or homes that have a lien against them.