Advantage Inspection Service, was on HGTV’s “My First Place”. A young couple was moving to Phoenix, Arizona and purchasing their first home. Watch David Swartz from Advantage Inspection Service give this young couple the run down on their first home.

Diahann Lassus wasn’t interested in becoming a landlord. As a certified financial planner by trade, she has watched the housing market fall and fall and fall some more. She heard stories of short sales and foreclosure deals but never put herself into the mix.

That is until earlier this year, when Lassus spotted a foreclosure sale sign on the lawn of a three-bedroom ranch home in the Bonita Springs, Fla., development where she already owns a house. She saw an opportunity.

Lassus, who also is a certified public accountant, is more financially savvy than the typical home buyer. But before she bid on a distressed property, she knew she needed to learn more about the current market.

“I’ve really never had the desire to get involved in buying investment properties before,” says Lassus, who splits her time between Florida and New Jersey. “I did a very extensive analysis prior to making my first offer.”

If you’re thinking of buying a home, Lassus’ recent experience offers a helpful case study of how to navigate the foreclosure market.

Here’s what you need to know.

Investigate Your Own Finances

About 4.5 percent of all homes were in foreclosure nationwide at the end of March, according to the Mortgage Bankers Association. Florida, Nevada and New Jersey topped the list with the highest foreclosure rates. Of course, that news isn’t good for the economy, but if you’re in a solid financial position, buying a home or a second home as an investment property could be good for your portfolio — if you buy smart.

Simply put, it’s a numbers game. Before you start looking at properties, make sure you can afford a home and contact a lender to get pre-qualified for a mortgage.

“Banks are looking for a fast close in the foreclosure market,” Lassus says. “If you are ready to go with a mortgage, you are in a much better position to negotiate.”

Be prepared to shop around for a loan. Some lenders are very cautious about financing a home in a foreclosure-laden area, and others won’t finance investment properties in certain locales. If you’re able to pay cash, you’re in a stronger position during negotiations, Lassus says.

Your cash is important for more than the purchase price, especially if you’re buying an investment property. You’ll need extra money for repairs, maintenance and to cover monthly bills if you’re unable to find a renter.

“Anyone buying property today needs to make sure they have the cash reserve to carry the property for a long time,” Lassus says.

If you normally maintain three to six months’ of living expenses in an emergency fund, you’ll need even more available if you’re carrying an additional property. (As you build your emergency reserves, consider these smart places to park your cash.)

Read the rest of this article at Secondact.com.

When our real estate market “cycles” through a downturn, the result is often an increase in foreclosure rates among homeowners. Clearly, a foreclosure is a very sad and distressing event for the homeowner. Lenders also feel the pain and build up a portfolio of REO properties (real estate owned). Properties are often sold at auction as a result of foreclosure. Sophisticated real estate investors, however, view foreclosures in another entirely different light — as an opportunity.

A thorough inspection is critical on foreclosed properties for several reasons. It is possible that the homeowner did not properly maintain the property as finances became strained. In some cases, an angered homeowner may cause both obvious and hidden damage to the property. It is not uncommon to see missing or damaged fixtures, appliances and components at a foreclosure property.

Lenders and the eventual homebuyers have an incentive to get a comprehensive home inspection. Some lenders may opt for a very simple pre-assessment that only serves to give them information about how to make the property “presentable” for a sale. This is not a full home inspection and cannot be relied upon for determining the actual property condition. In an auction setting, the buyer may only get the opportunity to hire a home inspector to give a limited assessment just before the auction. In this case, a follow-up comprehensive inspection is needed after the home is obtained.

It is often a challenge to get the utilities turned on before the inspection. Persistence is needed in dealing with the banks as you arrange for the inspection. Don’t give up and by all means have the home inspected. Who knows how many thousands of dollars it could take to repair an undiscovered defect.

Many homes today are offered for sale “as is.”  It could be a foreclosed property, a short sale, part of an estate, or a house where the owner can’t afford or is unwilling to make repairs.

If such a property interests you, the first step is to work with a knowledgeable and experienced Realtor.  You will need to have your agent present an offer that is subject to a reasonable inspection period (also called a due diligence period) which will enable you to insure that the home has no hidden defects that would effect your desire to purchase the property.

Once under agreement, your agent should recommend a minimum of three trusted and experienced professional home inspectors and allow you to contact them, discuss the scope of theirs services and fees so that you can choose wisely for the inspector you feel most comfortable with.  An inspection is always important but with an “as is” contract it can be even more so. You need to know if the place just needs carpet and paint or if mechanical systems like heating or plumbing need to be replaced. The condition of the roof, especially here in Florida, is also a critical factor.

It is always suggested that, if at all possible, you are present when the home inspection is made so you can talk with the inspector and understand any issues that become apparent. Make sure the utilities are on for the inspection.

If the inspection reveals some critical defects in major areas of the home that were not disclosed and/or were unknown to the seller (or bank), don’t automatically back out of your purchase contract.  The defect is now known by the selling party and is on record.  If it is important enough to the safety or salability of the home, it will need to be addressed.  Typically you can ask for the defect to be repaired or have your Realtor negotiate a credit off the purchase price.  For smaller or less critical issues, it will be your decision to continue or to cancel the purchase.

Gabe Sanders and Susan Maxwell are leading Realtors successfully serving the public for residential real estate on Florida’s Treasure Coast.

During the month of January, 2009, 36.8% of all closed residential home sales in the Greater Phoenix Area were lender-owned properties.

We all know that bank-owned and foreclosure property sales are clipping along at a furious pace right now. Many consumers are caught up in the perception that they will undoubtedly save mountains of money if they buy a distressed property. Experienced brokers and agents know that this is not always the case. Repair costs can grow rapidly and turn a “great deal” into a time-consuming frustration. Estimating repair needs and costs is crucial.

Your first step is a professional home inspection for several reasons. It is likely that the homeowner did not properly maintain the property as finances became strained. In some cases, an angered homeowner may cause both obvious and hidden damage to the property. It is not uncommon to see missing/damaged fixtures, appliances and components at a foreclosure property.

Start estimating. You can take the simple or detailed approach with estimating repair costs. A great first step is to go to www.fixfliprent.com/repairs where they have a free easy-to-use repair cost estimator. If you want a finely tuned estimate you can look at the Craftsman Book series of software. Trial versions can be found at www.craftsman-book.com/downloads which gives you the ability to estimate construction costs like a pro.

One final note. It is often a challenge to get the utilities turned on before the inspection. Persistence is needed in dealing with the various parties as you arrange for the inspection. Don’t give up and by all means have the home inspected. Who knows how many thousands of dollars it could take to repair an undiscovered defect.