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2.) You must use the bank's closing agent. What does this mean? It is an as-is deal and you will be purchasing the property with any liens that it come with it. They will not even do a lien search most of the times. Again, what does this mean? It means that there could be actions against the property with the city or county and you will be liable for all of them once you own it. There could be title defects that you would become responsible for. Many times, you will not even know of these issues until you go to sell it and your buyer's title company finds them. At this point, you will have to pay loads of money and waste numerous hours to have all of these liens corrected. If you were able to choose your own title company, they would have found them.

Why do the banks have you use their title company? Because a regular title company will not issue you Owner's Title Insurance if there are liens on the property so it must go through the company that the bank uses to protect them. Again, they can do this because this is part of their lengthy addendum that must be signed prior to contract. Between the repairs and the title defets, many people who buy foreclosures end up in foreclosure themselves or in bankruptcy.

3.) If the deal falls through for any reason at all, even that your own financing falls through, they will usually be able to keep your escrow deposit. On a regular deal with a seller, it is very hard for a seller to keep your money. Remember, the banks have more money than you do and will find a way to keep your money and, again, your money is generally held in their title company.

Now I'll move on briefly to short sales. Short sales, although harder to close becasue of the negotiations with the seller's bank, are a little better. But there are many misconceptions that you are getting a deal and have room to negotiate. A short sale is a sale where the seller owes more than what the property is now worth and the seller's bank must take a loss. The seller must prove hardship and must be behind typically three to five payments.

1.) The banks will not help the buyer with closing costs. In fact, the buyer will have to pay whatever closing costs of the seller's that the seller's bank will not absorb if they want to close. The bank is only willing to lose so much and, many times, the seller is left to pay several hundred to a couple thousand dollars. Usually, people that are pre-foreclosure do not have this money and the transaction will not close unless these expenses are paid for by the buyer.