I have been hesitant to write about the new house as I've been fully expecting it to come crashing down any second now. It's been six months since we moved, and it all still seems a little too good to be true. There's a catch somewhere, and I'm not talking about the water leaking in the basement. There HAS to be a catch and it HAS to be worse than that little aquatic drama.

I say that because, as a lot of people know, we bought this house for well under it's actual value. It was a foreclosure. We paid in excess of $100,000 less than an identical house in a different development sold for around the same time we closed. And, no, that's not a typo. Six figures, baby.

Of course, by "identical" I mean it was identical when it was built three years ago. By the time we went to buy the house, it was in significantly different condition than the other one. SIGNIFICANTLY.

Anyway, this all adds up to people asking us a lot of questions about buying a foreclosure. So, here are some lessons we learned. They may or may not apply to all situations:

1. There is a myth that there are all kinds of super-cheap houses in great condition sitting around. First of all, HAHAHAHAHAHAHAHAHAHAHAHA *gasp* HAHAHAHAHAHAHAHAHAHAHA. There might be in some regions, but it's not the norm. Houses end up foreclosed because people can't afford to live in them. That means they also can't afford to maintain them.

Our house had all kinds of broken stuff and that is why we got it for the price we did. The appraiser happened to show up on the day that it was raining in the family room (because of leaks in the master bath plumbing one story above the family room . . . a LOT of leaks). She also took note of the badly damaged wood floor, the significant amounts of mold in the basement, the dangerous front stairs, the deck to nowhere, scary paint jobs, and all of the holes in the walls. She knocked $100,000 off the value because of all the problems she found.

While we made the repairs for far less than $100,000, we were taking one hell of a risk when we agreed to buy the place. For example, while we were able to clean up the mold with a couple of days work and for less than $200, an estimate put permanent repairs to the problem up over $15,000. It could have worked out that way if the mold had been behind the drywall. We got lucky; it wasn't.

Nearly all foreclosures have the same sorts of issues. It's a risk and all you can do is hire a really good inspector and prepare yourself for the worst.

2. Another lesson I learned through the process is that there is no reason to subscribe to a website that reports to list foreclosures. I tried a few, and never found anything that I couldn't have found on a regular (read: FREE) real estate website (Howard Hanna is my favorite).

The "catch" is that if you are brave enough to be looking at pre-foreclosures, those sites can be very helpful. A "pre-foreclosure" is a house that has a foreclosure pending--one way out of the situation is for the homeowner to sell the house for enough money to cover the outstanding loan. We weren't willing to deal directly with a homeowner and preferred to let a real estate company make a little profit.

Basically, foreclosures are included in MLS listings just like any other house. A Realtor can see that a house is bank (or company)-owned, but it really doesn't matter. I just searched based on price, with a special eye out for houses that seemed like they might be priced a little aggressively.

FYI--foreclosures frequently have very little information available online. I *think* Realtors who specialize in representing banks make less on those bank-owned properties than they do privately-owned ones because they clearly spend less time marketing the houses. There are fewer photos (if any) and information is usually incomplete online. For example, there were only three photos of this house online, and two of them were really bad photos of the kitchen. Nearly every description field in the listing was blank. We looked at the house anyway (because of the price and our familiarity with the neighborhood) and were FLOORED when we saw the place. If the bank's Realtor had tried even a little to market the place, there would have been a bidding war and the house would have sold for a lot more money.

3. If it can go wrong, it will because the bank really doesn't care if they sell the place. We seriously didn't know if we were going to have a house two days before we closed. There were some issues with the bank lying on a disclosure. We knew they had lied, they admitted they had lied, everybody knew it was illegal, but we were left to either ignore it or find another house. The bank wasn't going to budge on price at that point because they really didn't care if they sold the place or not. If it had been privately owned, we would have been looking at a Royal Flush and would have been able to make some demands. But, we weren't dealing with a family who was at risk of losing everything if they didn't make that deal. Banks are willing to start over and they will break a contract in a heartbeat. They already have a bunch of lawyers working for them, so it's really not a big deal.

I could list a ton more stuff, but this is already WAY too long. Another day, perhaps. Hopefully I don't find the catch before then.