Searching for that rare gem...

This man is searching for the perfect foreclosed home - one in move-in condition that needs no work and which is priced ridiculously under its true value. Why is he shown in a garbage dump? because that's sort of what you have to go through to find that ideal foreclosed home. You must be willing to pick through tons of garbage, visit scores of cold, thrashed or vandalized houses, and endure the smell of sewer gases backing up in abandon homes.

I get an awful lot of requests from would be buyers these days to help them find that ideal foreclosed home. I know that they exist, because last year I found one with a young couple who were looking for an investment property. The house that we found needed almost nothing but some cleaning and a little paint. And, earlier this year I got to one of the boomerang houses that I wrote about on Friday just a little too late, with my clients. The house had been totally redone, but the owner (and would be house-flipper) apparently had run out of money and it had gone back into a second foreclosure.

So, do those gems in the rough exist, or are they just urban legends? I can attest that they are out there, but I can also tell you that you'll be spending quite a bit of time like the guy above, rummaging through some real garbage, before you find what you're looking for. Just dress warmly and take a flashlight, if you are going out on a foreclosed house hunt, since most of them are winterized and many have no heat or power for lights.

The other thing that you need to do is to get yourself pre-qualified and be ready to act quickly and decisively, if you find the right house. The good ones just don't last long on the market, once they are priced right and the banks won't even look at your offer, if proof of funds or a letter of pre-approval isn't with it. If you find a really nice house at a great price, you should also be ready to make a full-price offer (or near full price), if you really want the house. It's not unusual for the really good foreclosed homes to have multiple offers going to the banks at the same time. there are those out in the market who just run around making "low-ball" offers on every house, to see if they can steal one or two from banks tired of dealing with them. So, if it's a good house, which last sold for $250,000, and the bank is offering it at $150,000, you risk losing it to a more serious buyer it you come in at $120,000. Offer at the 95% or better level for nice, clean, move-in ready foreclosed homes. Likely, the bank is already taking a beating on the place and isn't going to look kindly at you trying to take further advantage. If nothing else, listen to your Realtor's pricing advice.