Here are some things to keep in mind when considering a distressed property purchase:

1. Foreclosures are the most problem prone and strenuous type for real estate purchase.
2. You never get a perfect house. You get price per-square-foot. You must be willing to put in the time and money to create your perfect house.
3. You must have capital to purchase a distressed property. On average, you need 10 percent market value in cash to reinvest in the property.
4. Most if not all of the time the seller has no knowledge of the properties previous history. So, the inspection process on the house is more costly. It is also recommended that the potential buyer do more than a typical inspection. For example, a potential buyer should consider paying for a “Sewer Scope,” which costs about $250.00.  Moreover, hire a contractor and get a written estimate to repair the foreclosed home.
5. In many distress properties the water and electricity is shut off. The trust company — and or the seller — will not turn them on the water and electricity. So buyers should test the plumbing and electrical systems as part of the inspection. In most cases, the buyer will have to pay to have those systems turned back on. In other words, you have to “pay to play.”
6. The house has to be livable in order to get financing.
7. Banks have a bottom line too. They will only go so low no matter what the issue is with the property. Lending institutions are loosing billions of dollars, a few hundred dollars matters to them. You have to be willing to take on the issue for the price or walk away.
8. You will be scared. You will be nervous. You will have doubt. Your Realtors job is to negotiate that price to a large enough margin; so if you screw up, you will not be upside down in your purchase.
9. If there is no commission built into the purchase price, you will have to add it to the purchase price. You are making money, and so should your Realtor. 

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