Interest in buying foreclosures is on the rise and the statistics show that nearly half of all home sales are distressed properties.

Even though it is hard to argue that these deals are the best pricewise, home buyers need to be aware of possible traps that exist when dealing with foreclosures and bank owned properties.

If you are thinking of buying a foreclosure at auction keep in mind that most likely you will not have an opportunity to see the property inside. Auction buyers usually don’t have the time to ensure they are getting a clear title and possible deficiencies may exist.

One of the biggest myths is that you can get a fabulous deal when buying a property at auction. Usually banks set up a reserve price and if this amount is not reached the property will not be sold. This is the main reason why most of the auction properties become bank owned or REO(real estate owned).

Once a home becomes bank owned and is listed on the market, a home buyer must be aware of the following facts and traps:

- The property is being sold in “AS-IS” condition. No bank wants to invest additional funds in making repairs or satisfying lender requirements. That is why the AS-IS clause is made part of the contract and obligates the buyer to satisfy any lender required repairs. You should expect to take possession of it, if you buy it, in exactly the position and location it is, no matter how defective. It is solely buyer’s obligation to inspect the property and discover any potential deficiencies. There is no expressed warranty or representation in regards to property condition.

- Bank Addendums supercede Regional Sales Contract. Part of the purchasing process when dealing with REOs is that bank addendums always follow the initially submitted purchase offer. Make sure that you read and understand all information listed in the bank addendums. Verify that all terms and conditions are the same and nothing important has been changed including contingencies, settlement date, settlement agents.

- Make sure that the property has clear and marketable title and that property insurance claim history is checked. This can save you thousands of dollars in the future. You can read more on the topic here http://alexandriarealestatemarket.com/get-insurance-claim-history-before-you-buy-your-new-home/.

When you’re buying a foreclosure, expect glitches, expect your calendar to be derailed, expect the bank to be inflexible and possibly even unreasonable. It’s not overkill to ask your broker or agent to brief you on the common complications they see in REO transactions. Having realistic expectations may keep you from pulling your hair out. And if the transaction turns out to run smooth as silk? You’ll be pleasantly surprised.

If you are interested in obtaining a FREE list of bank owned homes for sale in Alexandria VA please visit http://alexandriarealestatemarket.com/foreclosures