Logically, the sweet spot on price should be where the buyer is getting a home at a little under market value (to make up for the hassle of a short sale) but where the bank is still netting more than they would if they foreclosed. In that case, all parties are benefited by the short sale arrangement.

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Lately, however, I am watching many banks reject offers outright (even at amounts that they had previously accepted on the same property). With no opportunity to respond, the buyer is left either randomly increasing their offer in hopes that the bank will accept or simply walking away. Most buyers opt for the latter.

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Buying a home that has been foreclosed can be a very good deal, particularly if you have money to invest in fixing it up. You generally end up with more in equity than the amount you spend fixing the property, particularly when you do some of the work yourself…. Even if you’re a first time homebuyer with no money for cosmetic or other repairs, a foreclosure may be within your reach with creative financing that allows you to finance the repairs based on the repaired value of the home.

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