Avoid bidding wars
Many agents list bank-owned houses for less than they are worth to grab buyers' attention and attract multiple offers. Once potential buyers are emotionally attached, bidding wars begin.
Don't fall for the gambit.
Do your homework to find out what the property is really worth based on what comparable homes in that area have recently sold for.
"Know what the property is worth and know what you can afford," before you engage in a bidding war, says Jeff Richardson, a Realtor at Alliance Bay Realty in San Mateo, Calif. "You don't want to overpay."
Thompson says, "It's not uncommon for a foreclosure to come on the market for $150,000, get 12 or 15 offers and sell for $175,000."
In some cases, even when the property sells for more than the listing price, it may still be a bargain. That's why it's so important to ask your agent to do a market analysis to determine the house's estimated value.
"I've seen properties sold -- even to investors -- and I've said, 'I can't believe they paid that much for this place,'" Thompson says. "It wasn't worth it. That's why being educated on the market and being able to control yourself and not get emotional helps you make a good financial decision."