Honestly, no.

Arizona foreclosures are a deep and complicated subject. I’m not a foreclosure expert. This long post only scratches the surface.

There are a few typical Arizona foreclosure plays.

1) Foreclosure Auctions

You can buy a foreclosure at the auction on the county courthouse steps. That can be very risky because usually you can’t inspect the home before purchase. If you are comfortable spending hundreds of thousands of dollars on a property you have never been inside, then this strategy might be for you.

In addition, if you “win” the auction you have to pay all cash for the property within 24 hours of the auction. There is a ton of downside risk. This strategy is only for the real pros. I don’t mean real estate pros, I mean foreclosure pros.

2) Pre-Foreclosures

Pre-foreclosures are another strategy. You buy a property from an owner who is being foreclosed on by the lender because he’s behind on his payments. This is a TON of work. I hear you have to contact many, many dozens of people in this situation to find one that will sell to you. If you enjoy spending your evenings and weekends knocking on the front doors of zillions of people who are in the process of being foreclosed on and trying to get them to sell to you, then this strategy might be for you.

There’s a ton of downside risk here too with unpleasant surprises, such as finding out the property was used as collateral, or there’s a tax lien on the property, (Hey, the guy’s being foreclosed on after all) and the lien holder now, quite rightly, wants his money from YOU since you are the proud new owner of the property. This strategy is only for the foreclosure pros.

3) FHA and VA Owned Properties

FHA and VA own the homes they have foreclosed on and they post them online. That could be a possibility if you can find one you like. Each agency has it’s own quirky, unique procedures for buying homes they own. If you like working with government redtape, this strategy might be for you.

If you go this route have a Realtor help you. The government agency will pay your real estate agent so the agent doesn’t cost you anything.

4) Short Sales

In the MLS there are many short sales in some areas of metro Phoenix. A “short sale” means the sales price is less than the mortgage amount. You can almost think of them as pre-pre-foreclosures. Short sales can be difficult transactions for buyers because the bank, obviously, has to approve the less-than-the-mortgage-amount sales price.

Banks, not surprisingly, want their property to sell for the most money possible – banks are like that – so the properties are not necessarily smoking deals. The banks want the properties to sell at market price.

In addition, short sales take longer to work out and to close escrow because the bank bureaucracies are slow to make decisions. A bank can change its mind at the end and suddenly not agree to the sale. Short sales fall out of escrow at a high rate which can be very disruptive if you’ve scheduled a move to Arizona and you find out at the last minute that the bank nixed the sale and you have no place to live.

5) Bank Owned Properties

After a property has been foreclosed on and it’s owned by the bank, the bank will often hire a real estate agent to sell the property and the agent will often market the property via the MLS. You find these previously foreclosed on properties in the MLS.

When you are looking at listings in the MLS you will find properties that are both “pre-foreclosure” (short sales) and post-foreclosure (bank owned). So the MLS itself has a lot of “foreclosures” for you already. In both of these cases the banks control the sales price and the banks want to get the most money possible for the properties. They may not be bargains at all.

I think you can find a great primary residence anywhere in metro Phoenix without taking on the risk and inconvenience of buying a foreclosure.

If you are buying an investment property, you live in metro Phoenix and you are willing to put a ton of time into the project, then buying a foreclosure makes a lot more sense, at least for some people.

Strategies #1 and #2 are only for the foreclosure pros in my opinion.

What’s your opinion?