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Mortgage banker Thomas Murray has given The Real Story some great advice this week about how to avoid foreclosure.  Flipping the question around, we asked him for pointers on how to buy a foreclosure.  His unexpected and vehement answer was:  if you’re a first time buyer, don’t do it.

Why?  Well, says Thomas, a foreclosure is sold “As Is”.  That means you go to a foreclosure auction and pick a home from a slide sight unseen, THEN the home gets inspected.  Guess what?  The home may have the owner or tenants still living in it, and it’s the buyer’s responsibility to get them out.  The fact that the house might have had all of the appliances and light fixtures ripped out by the departing owner means that the new buyer needs to repair the property to an acceptable level of habitation BEFORE the loan is available.  This could mean big money out of pocket.

Thomas advises a buyer who wants to make a purchase of a foreclosed property to call a local realtor.  Realtors have great connections in the community, often know about short sales and foreclosures before they hit the market, and will do the research on the house beforehand.  Realtors know about homeowners insurance for resales, and a number of other relevant—and angst-stopping—services for the buyer.

Another timely tip:  there are hundreds, maybe even thousands of websites that offer online listings and advice on buying foreclosures.  Thomas advises consumers not to pay for those listings—banks offer them for free, as do many brokerages.  If you don’t get far on bank websites with the word foreclosure, try REO—for “real estate owned”—bank talk for foreclosed properties.