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A foreclosure can be a disaster for some. For others, its the deal of a lifetime.
Jay Panozzo found this foreclosed home for $742,500, according to the Hall County Tax Assessor’s office. On the real estate Web site, the home’s value is estimated at $950,000. - photo by Tom Reed

Tips from the Better Business Bureau

Know your options

Pre-foreclosure sales allow you to purchase a house directly from the homeowner before it goes into bank foreclosure. Lenders may also sell properties they have taken over using an agent who specializes in such properties. At auctions, you bid against other buyers at the courthouse or other locations.

Conduct a title search

This process, usually conducted at a county courthouse, will show whether the property has a second mortgage or lien against it. If it does, you may be responsible for paying off the initial mortgage, any second mortgage loans and any liens on the property before you can take ownership.

Properties sold at auctions are usually sold "as is." This can create problems when trying to obtain a mortgage if the property won’t pass inspection.

Get help if you need it

Find a real estate agent who is experienced in foreclosures and check him or her out with the Better Business Bureau.  Have your agent check nearby or comparable homes to see if the asking price for a foreclosed home is, in fact, a bargain. Consider the costs of cleanup or repairs if the home isn’t in good condition.

Better Business Bureau

It took 10 years for Jay Panozzo to land a deal of a lifetime on his dream home on the shores of Lake Lanier.

But all it took, said the Chicago resident, was the economy taking a dive for his dreams to come true.

"We had been looking at Lake Lanier properties for about 10 years and watching the steady increase of the value to the point of where we thought they were out of reach," he said. "... they were inflated, there’s no doubt about that. We bought the house and it was a foreclosure."

The only drawback? The brick home with a three-car garage needed a lot of work on the inside.

"It was in need of repair. Any time you deal with a foreclosure the owners more often than not go in and pull the appliances, take out the light fixtures," he said. "We’ve looked at a lot of houses; this was probably the one with the least amount of repair. However, it still needed at good $25,000 worth of repair."

Bargain-hunters beware — in the Panozzo home, the light fixtures were removed, along with the plumbing, appliances and a stereo system that was wired throughout the home.

"This is the third (foreclosure) I bought and one of the problems is you don’t think there’s a lot of damage," he said. "But when you get knee deep into fixing it, before you know it you are up to what the true value of the house is anyway."

That’s why broker Joe Williams cautions people who feel they can find the perfect deal in a foreclosed home.

"The main reason that people buy foreclosures is that they think they are getting an opportunity based on current market conditions," said the owner of Remax in Gainesville. "The foreclosures are less than 50 percent of the sales (in Hall County) ... so you can certainly (get a deal) based on value as far as your payment — that’s a plus. But basically there’s a lot of good buys out there regardless. So the advantage is you could probably get a good price. The disadvantage is you may or may not get exactly what you are looking for."

As with any venture into home buying, he recommends shoppers do their homework.

"I encourage everyone to search the market and compare because things aren’t always as they appear. I believe that people should buy what they want and look at it as a long-term investment."

Panozzo added if people are in the market for buying a foreclosure, the time is now.

"I’ve bought three homes in the past three years and decided to invest in real estate and not the stock market," he said. "My other investments for retirement started to take a hit so we pulled some money out and dumped it in real estate."

Investing for the future also is what Jarrett and Kim Kiesel were thinking when they started purchasing foreclosures about seven years ago.

The most recent investment property the couple purchased was in perfect condition — but that is not always the case.

"We didn’t do anything to it and we moved tenants in and that was it," Kim Kiesel said. "The one that we did buy on the courthouse steps it was rough. It had to basically be gutted and start over. But the one that we bought in town recently was perfect."

There are ways Kiesel said she and her husband narrow down the field of foreclosures before settling on one.

"We try to narrow it down to a certain area that we are interested in," she said. "So the way that we’ve always done it is, you look in the paper, see if it’s in the area that we desire, and if it is then we drive out and look around the house. Sometimes the home is open, sometimes it isn’t."

And it’s important to know when a home has "good bones."

"The type of houses that we buy are kind of the same, so we kind of know if the bones of it are pretty good," she said.

The Kiesels have bought foreclosures that have been auctioned off on the courthouse steps and through their Realtor, Beverly Filson.

"It’s like a live auction and you have to have the cash money," Kiesel said. "Or they might give you a few minutes to go to the bank to get a check, so you kind of have to have your ducks in a row.

"The other way we have done it is through a Realtor. We have a good relationship with our Realtor and she would call us when they got listed and we bought one that way, too. Actually, we bought two that way."

Filson said the foreclosure market locally has a large inventory and plenty of value.

"Two or three months ago you could get great deals, but you are seeing more and more and more coming on the market right now," said Filson, with Coldwell Banker Heritage. "I think we are saturated with foreclosures and I think you can get a lot for your money. And if you’ve got cash you are in a great position."

Filson added that every property is different.

Hiring an inspector is a no-brainer, she added.

"You’ve got some homes that are resale that people have lived in, and then you’ve got new construction that have never been lived in," she said. "Regardless of which it is, an inspection is always a must in my mind."

And if you have the means, Filson said, the foreclosure market holds some good deals.

"The bottom line is, there are a lot of foreclosures and a lot of value, in most cases, of what you’re getting."