Foreclosures: We Have to Warn You!

Seems everyone these days thinks they can score a house on the cheap by buying a foreclosed property. There are good deals to be had, but we have to warn you, the process is complicated and risky. Foreclosure properties are much like fire, and you know the old saying, "play with fire, and you could get burned."

There are three different stages of foreclosure, each of which presents different opportunities for buyers. The first step is to figure out which one makes the most sense for you, if indeed any of them do.

Pre-foreclosure

A home goes into pre-foreclosure when a borrower has fallen behind on his payments, but the house has yet to be auctioned off.

Buyers can find pre-foreclosures by sifting through the delinquency notices that lenders file with county courthouses when a borrower misses a payment.

Some owners are open to doing what's called a short sale, which is when a buyer pays less for a house than the mortgage that is owed on it. Lenders have to agree to a short sale, and will then forgive the rest of the debt.

Often, banks are reluctant to approve of such deals since it requires them to take a loss. This process can take months and a lot of badgering before a deal goes through, and not every buyer is up for that kind of hassle.

Sheriffs' sales

Another stage of foreclosure is when homes in default are auctioned off on the county courthouse steps. These homes can be real bargains, but the process is a crap shoot.

Bidders can't inspect the property, so there's no telling how much work it needs. And there is also no telling what kind of liens there are against the home, due to unpaid taxes and so forth, which can also jack up the cost of these homes. Finally, buyers need to come with cash, ready to put 10%-20% down on the spot, and able to pony up the rest in a matter of days. This method of buying a foreclosure is not for the beginner or first time homebuyer!

Post-foreclosure

After a lender takes back a house, the property goes on the market as what's called an REO (real estate owned) property. These are treated like ordinary sales, listed with a broker. Typically, bargains are not as sharp.

If you want to dive into the foreclosure market, this is the only method we recommend you even think about. The process is fairly clean, the title is clear and the property is delivered vacant, even though the prices may not be as low as a courthouse steps auctioned property may be.

Talk to us if you feel brave and want to explore the foreclosure market. We'll let you know if there are any such properties in the market and in your price range of affordability.

Lengthening Check Float Times

Not so long ago, getting funds into your checking account to cover a check you'd written was much easier. Electronic banking has all but eliminated the check float… or has it?

Money Talks editor Stacy Johnson looks at some ways you can lengthen the float time on your money. The video runs 1:26…

Do you ever wonder why banks can process a check against your account almost instantly, but it can take 24 hours for a deposit to show up when you make it? What do you think? Are banks using our money without our permission? Leave us your opinion by clicking on the comment link below and sounding off. We'd love to hear from you.

Gas Prices: Is the Worst Behind Us?

U.S. retail gasoline prices have fallen more than 10 cents per gallon in a week and could fall another 25 cents by the end of summer. Could this be a sign that the worst is over for U.S. motorists this vacation season?

The decline tracks a record pullback in the price of crude that has come amid mounting evidence high energy costs and an economic slowdown are shrinking American demand for fuel.

Despite the recent declines at the pump, gasoline prices remain more than $1 higher than last year at this time.

What do you think? Is the worst behind us at the pump, or is this just a temporary lull? Use the comment link below and tell us what you think.

Protect Your Savings From Inflation

Not all savings methods are created equal. In fact, some can actually cause you to lose money. Money Editor Stacy Johnson explains in this short (1:31) video…

If you have any comments or questions, please post them here using the comment link below. Your privacy is protected, as we NEVER publish the email address of anyone who posts on our blog.

Housing Upgrades That Don't Pay

Before you dive into a major renovation project to give a house your special signature, consider how long you're likely to stay in the house.

A lot of people get into trouble by going into a home they're only going to be in for a relatively short period of time, and they start doing renovations and additions that are sort of on their fantasy list, but they're not going to be there long enough to really enjoy.

Here are four reasons to proceed with caution, particularly if you want to maximize your chances of a profitable resale later on.

1. High maintenance - If your upgrade requires too much upkeep, buyers may view it as more of a nuisance than an asset. A prime example is an in-ground swimming pool, which can cost a small fortune to install, secure, heat and clean.

2. Overdressed - Luxurious amenities can be a good selling point, but only if they blend in with rather than outshine what the neighbors have. Having the nicest home in the neighborhood can be a bad thing when it's time to sell. A prime example would be upgrading the kitchen in an entry leval home to reflect remodeling from high-end home magazines.

3. Too Personal - Making a "Cookie-Cutter House" in the image of your own exquisite taste. Any time you deviate, no matter what the improvement is, from what is a fairly traditional, single-family house, you run the risk of improving in a fashion that will not lend itself to additional dollars at re-sale time.

4. Unpopular - If no one else on the block has a room like the one you're adding, or all the other houses boast the very feature you're getting rid of, watch out. For example, although converting your garage into an office, bedroom or playroom can be a less expensive way to add square footage and create more living space, it can have drawbacks. Potential homebuyers might miss the sheltered parking more than they welcome the additional room, especially if other homes in the neighborhood have garages.

This final tip for whatever type of home renovation you may be considering: Before you do anything in a house, live in it for a while. Prioritize what needs to be done, then go back a year later and see how much your list has changed.

If you have comments or questions about this article on housing upgrades that don't pay, use the comment link below to sound off. Your privacy will be protected, as we never publish anyone's email address on this blog. We welcome your comments.