Hidden Foreclosures: Not all foreclosures are previously owned homes. Some homes may be new and rarely appear on foreclosure lists. Numerous homebuilders are finding that they are at the end of their construction loan and have new homes that have not sold. When this happens the banks may take possession of these homesand attempt to sell them by hiring real estate agents to handle the sales for them. These are considered hidden foreclosures since no one associated with the selling of these homes willl call them foreclosed homes.  You may also come across a homeowner who is about to go into default and doesn't want to lose all of the equity in the home so they will sell the home below market value.

Pre-foreclosure Buys: These homes can also offer a value and bargain but demand persistence. This can be because more often than not creditors are hounding the homeowner and contacting the homeowner may be near impossible. Sometimes a buyer may make contact with with a homeowner but may be surprised to find out that the homeowner has no phone or utilities and or personal and legal problems. They may also need a place to live before they can move out of the home a buyer is interested in. Dealing with this type of purchase can present some risk but the rewards may be significant for the buyer.

Buying A Home At Auction: Most auctions take place at county courthouse steps and can pose significant disadvantages for the buyer. The buyer may not be able to inspect the property and have to normally put up the entire purchase price the same day or within a couple of days after the auction. One place to look for homes is with HUD who auctions off homes that went into default that were backed by the federal government.

There aren't a lot of bargains in this area since most of these homes sell close to their assessed value.

The Cost Of Getting Started:  Depending on the lending standards of the bank if you have good credit many banks may loan the full price of a foreclosed property.  If the property is an investment property a down payment of 10% or more may be required.  Additionally if you have a large amount of equity in another property you may be able to get a line of credit on that property that allows you to purchase a foreclosure. One benefit of this is that when the line of credit is converted to a mortgage no down payment may be required.

Foreclosed homes bought in good areas at below market value and appreciate can be a very sound investment strategy. The appreciation of these homes can be tax exempt until the are sold unless the home is a primary residence in which case the appreciation is tax exempt. Last but not least these properies can provide valuable tax deductions.