Tips For Bidding on Foreclosures

From The LA Times:
Foreclosed properties are piling up faster than they can be sold, but that doesn't mean buyers can snap up a great house with little effort. Quality properties in good locations now draw multiple offers when priced right. Here are some tips for extracting gems from the rubble.

Know when to lowball
If a home you want has been on the market for several weeks, it is probably overpriced, says Sean O'Toole, chief executive of ForeclosureRadar, an online seller of default data. Banks may be willing to accept a lowball offer on such properties to get them off their books, especially at the end of a quarter. The end of December is an especially good time for buyers, says O'Toole, who has bought and sold more than 150 foreclosed houses.

Be ready to compete
When an attractive -- and attractively priced -- property hits the market, lowballing can backfire, O'Toole said. Banks selling houses generally follow a formula that allows for substantial price reductions only when houses don't sell for a specific number of weeks or days. Experienced foreclosure buyers say that for high-quality homes, it's best to offer close to list price or a quick escrow, perhaps 15 days.

Here's a play by play report of a typical auction.