Can title insurance save your home?
Are some foreclosures riskier to buy than others?
There are generally two ways to buy a foreclosure: on the courthouse steps or from the foreclosing lender -- also known as "real estate owned," or REO.
An REO sale is similar to the traditional buying process, except the home has gone through foreclosure.
Especially these days, a courthouse foreclosure sale is seen as much riskier than an REO sale when it comes to securing title insurance.
"We are less likely to insure these than if it's coming directly from a lender," Waiwood says.
Because it's a bidding situation, it's harder to have title insurance already in place before you buy the property. If you try to get it after the fact and there's a problem with the title search, coverage may not be available.
"I recommend waiting until it goes through the process and buying it REO," says Ron Phipps, president-elect of the National Association of Realtors. "You're much better off buying it as REO knowing you can get title insurance."