Blinded by the price: Tips for bargain shoppers

Home buyers may be attracted to the big bargains that foreclosures and pre-foreclosures can offer. But distressed properties can involve tricky, lengthy transactions, and there’s a lot to think about before jumping in.

Four moves to make before you buy:

Never underestimate a title search: Recent liens could have been placed on the property, even in the past few weeks. Perhaps a contactor was not paid for a major repair and chose to file a lien against the property. Experts also recommend running a title search on the property to find out if the property has any liens from other lenders or whether any property taxes are owed.

Look for special financing: The Department of Housing and Urban Development offers some options, including the FHA 203(k) program which provides funds for fix-up and purchase. The loans require a down payment of 3.5 percent of the purchase price for owner-occupants.

Inspect, then have a pro inspect: Buyers should make their own list of problem areas they see in the home and then compare notes with a professional home inspector. Make a professional inspection part of a contingency clause in your offer agreement. You might be able to use any condition problems uncovered in the home inspection in negotiations to justify a price discount.

Get a good, realistic value: Buyers need to carefully review a list of comparable sales prices in the area, the number of nearby foreclosures, local school districts, and close-by amenities. Stick with your bottom line on price, but don’t expect a miracle – or that the property will immediately be worth more than you paid.