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“But basically, you get a home inspection so when you take the property over you know what you’re going to have to fix.”

Duncan recommended buyers who are seriously looking at foreclosures also be “open minded” to other options such as individual sellers. Many of them have dramatically reduced prices and are ready to negotiate.

That’s just what Vancouver residents Frank and Liz Malinka ended up doing. They looked at nearly 100 homes — many of them foreclosures — before deciding on a midcentury modern that wasn’t a foreclosure or short sale in the Racquet Club Estates area of Palm Springs.

“We had a clear vision of what we wanted and pretty much stuck with it,” said Liz Malinka.

Taxes and liens

A foreclosure typically wipes out the prior owner’s private debt, but there can also be public debt against a property, such as real estate tax or income tax, Franklin said.

Buyers should work with Realtors and the escrow company to research the land lease, property taxes, mechanics’ liens or lawsuits.

Although most liens are cleared at a foreclosure auction, some liens survive and carry over to new owners.

On tribal land, buyers should watch for illegal land transfers in which the landowner takes out a second mortgage and never reports it to the Bureau of Indian Affairs.

Prospective buyers should also be on the lookout for separate ownership “transfer fees” that can be as much as $4,500 in some valley country clubs.

In short sales, buyers should be sure to review the terms approved by lenders and not be afraid to say “no” later in the process.

Buyers engaged in short sales should be patient and brace themselves for what could be a long process, Fuchs said.

One of his clients spent eight months waiting for a short sale to go through, only to have the bank then foreclose on the property.

Duncan said buyers of foreclosed properties may qualify for 203k loans to make improvements.

“Say they’re asking $135,000 and the contractor gives you a bid for $25,000 to make repairs,” Duncan said. “So now the bank will bump up your loan amount to $160,000. It has to appraise at that amount, after it has been completed.”

Buyers should realize banks have different rules when dealing with foreclosures, Duncan said.

“With Freddie Mac, the asset manager makes the decision on which one of the multiple offers he’s going to take,” Duncan said.

“Bank of America wants me to negotiate and tell them which offer we’re taking.”