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Question: Most auction notices state that purchasing a foreclosed property will require a minimum of $5,000 down and the rest within 30 days in certified funds. Can you get financing from an institution for the remaining balance or does it all have to be "cash"?-- Cara, Newport, R.I.
Cara: Whether a buyer is permitted to use financing to purchase a property at auction varies from state to state. But there are other important factors to consider even if it's allowed. These begin with whether a lender would lend you the money. George Achenbach, who wrote "Goldmining in Foreclosure Properties" (John Wiley & Sons, 2003), says you might be able to get financing in advance if you have a good relationship with a lender. Otherwise, he says, most lenders tend to shy away from advancing money for homes on which the borrower doesn't yet have title. Mr. Achenbach, who says he has bought dozens of foreclosed homes in California over the years, doesn't recommend that people invest in foreclosed properties unless they have substantial money of their own. That's because you don't know how long you will own the house before you can resell it. And you don't know how much money you might have to put into the house to make it salable. Another thing to keep in mind is that the huge rise in real-estate prices in recent years has made the market riskier. Make sure you know the local market very well, and don't rely on prices to keep rising. -- Mr. Hagerty is a staff reporter for The Wall Street Journal. His "House Talk" column appears most Fridays on RealEstateJournal.com. E-mail him your questions about the residential real-estate market. Please include your first name and city and state. If your question is answered and posted, we will show your first name and city. Due to volume of mail received, we regret that we cannot answer every question.
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