Partly due to the massive amount of media coverage over the last two to three years, there are a many more home buyers out there considering buying a foreclosed property. The news coverage has taken some of the mystery and fear out of the foreclosure process, as well as letting the world know that there are a great many homes out there in foreclosure and at bargain prices.
For cash buyers, this presents a huge opportunity, and investors all around the country are scooping up foreclosed homes, rehabilitating them, and selling them on the retail market. But, what about the buyer who must finance their purchase? It's also been well-covered in the media about how many people losing their homes let them fall into disrepair, or worse yet, strip them of everything from appliances to flooring. This leaves the home in "un-livable" condition, something mortgage lenders consider a big problem.
If the necessary repairs and rehab are reasonable, the buyer may be able to negotiate a set-aside or escrow for the repairs to be done immediately after closing and the contractors paid from the escrow. However, this is not common and a tough thing to get past lenders who don't want even that much risk. If you're really interested in the "bargain buy" opportunity in foreclosed homes, take a look at Homepath for homes pre-approved to have all corrective work done before closing and rolled into the home loan. Get a livable home with brand new repairs and rehab work done, and still get that bargain you're wanting.