Is it more beneficial to buy a forclosed home or no. I want to look into buying my first home soon and want to weigh my options...

Generally, a foreclosure is not a good option for a first time homebuyer. As stated above, foreclosures often sell for near the price of a non-foreclosure. If you add the cost of the simple things such as appliances, paint, window coverings, landscaping etc. that can add thousands to the cost of a typical home. If you pay nearly the same for a foreclosure, you have not saved anything. Additionally, the process can be time consuming, difficult and frustrating. I have put an offer only to have the bank sit on it for a month and then tell me they accepted a higher offer.

Having said all of that, if you are someone that is handy and enjoys finding a bargain, you may be able to find one. I doubt that many are making 5-10 times the purchase price as stated above (I have NEVER seen a $500,000 foreclosure listed at $100,000), but you can find properties 20% or more below market value if you search and are willing to do some work.

Good luck to you in your endeavors. You can see my 360 page for tips on finding foreclosures.

Personally, I don't think it is worth it.

My husband and I bought our home in 2002, and it was a foreclosure. It was our first time buying a foreclosure. We bought the house for $104,900..it appraised at the time for $128,000..it just re-appraised at $242,000...our home had "instant equity" when we bought it of $23,100 (the difference between the purchase price and appraised value) which we used as our down payment...
Foreclosures can be risky...they are often sold "as is"..meaning any repairs will be borne by the buyer....however, hiring a home inspector to find these things, can be money well spent to be sure you're not buying a money pit...always have this done (even if purhasing a home not a foreclosure)....don't trust your "eyes" or those of a friend to find problems with the property. A home inspector is trained to find all the little things that may be wrong, or could potentially go wrong...
Know that buying a foreclosure can sometimes mean you have some "fixing up" to do...but, there are some "gems" out there...just be careful...it can be a wonderful investment...

The majority of our real estate practice deals with foreclosure properties. The majority are not a good option for a consumer buyer as they have so much damage that they will not qualify for a loan.

There are exceptions. I have a house listed right now for a bank that is in perfect condition. The carpets are brand new and it was just painted before foreclosure. It is priced 15k below market at 115,000. It is worth 130,000. So this would be a good choice if it is the location and style that you would have chosen anyway.

The Washington Post did an article on this topic recently and the conclusion was: don't expect any good deals just because it's a foreclosure. The bank will sell to the highest bidder if there is a bid that is more than the payoff of the mortgage. If there are no higher bids, the bank will buy the house, and turn around and sell it at market value. In the current market, a foreclosure most likely means the payoff is higher than the market value of the house.

One big difference with foreclosure sales is that the house is usually not prepped: you get it without the new paint jobs and cleanings that many sellers normally put into their homes. Another difference the Post pointed out is that the bank can sit on your bid for months before deciding whether to accept it, which ties up your money and keeps you out of the market.

So consider it as an option but look at the usual offers as well.

You can find great deals on forclosures. We've done it 3 times. We bought forclosed homes, fixed them up nicely and sold them for 5 - 10 times what we paid.
The other thing you could look into is first time homebuyers loans. They are usually lower interest loans but only first timers can use it. Check with your financial institution to get information.

Yeah, why not? They should be cheaper b/c the bank MUST sell them as they don't like owning houses...

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Metternich