In last month’s Casino Connection, we focused on the unfortunate situation of foreclosures in the housing market and how to avoid them. Those who find themselves in this predicament need help and all the advice they can get.

The opposite is also true, however. With thousands of homes in foreclosure—one expert estimated that 14,000 homes in the Las Vegas Valley were for sale via foreclosures—there is also a golden opportunity for those with capital to invest and faith in the real estate market. But it’s not that easy.

While we are seeing the largest foreclosure market in American history, it’s not an automatic profit center, even for those experienced in buying and selling foreclosed homes. Despite what you may hear or see, there is no get-rich-quick guarantee to foreclosures. It’s hard work to make money from foreclosures and it’s not all evident.

So let’s review what the strategies could be if you’re interested in taking the plunge. Here are 10 steps to take:

1) Get a buyer’s agent: A buyer’s agent is a real estate agent who represents you as a buyer. Remember, a real estate agent usually represents the seller, so they are looking after the interests of only the seller. If you’re interested in buying, hire someone who will look after you and you alone. Interview several agents before you decide on the right one.

2) When you find a property, research its history: This is one of the advantages of having a buyer’s agent. They do the grunt work for you here. This will tell you what the bank paid for the property as the lender and the price they are asking

3) Determine comparable sales: Your buyer’s agent can also find out what other similar properties in the neighborhood have sold for. But this isn’t always a great indication in this market. Since there haven’t been many sales in the past six months, the prices paid may be out of date. So you have to consider the pending sales (where agreements have been reached, but the closing has not occurred) and active listings.

4) Research the listing agent: Foreclosures are handled by “REO agents” who traditionally work for two or three banks. Have your buyer’s agent research the sales history of those agents. You can see how much they have discounted the asking price to give you an idea of how much they are willing to bargain.

5) Check out the offers: If there have been no offers on the property, you can probably submit a much lower offer than the asking price.

6) Submit a mortgage pre-approval letter: Banks are anxious to sell so if they know you are a qualified buyer, they may accept a lower offer from you rather than consider a higher offer from someone else who is not approved yet.

7) Offer to split fees: While some banks will not pay transfer or escrow fees, others will. Offer upfront to split those fees, which give you another advantage to having your lower offer accepted.

8) Downplay inspections/repairs: Most banks won’t spend another dime on a house they want to unload, so getting the house inspected will be almost useless. But you should set a ceiling on expenses so you can negotiate any major problems after having your offer accepted.

9) Shorten the inspection period: Since it really doesn’t play a huge role in foreclosure sales, cut the days you are entitled to inspect the house by as much as half.

10) Don’t be put off if your offer is rejected: Remember, they are still banks. Negotiating with a bank is different than negotiating with a typical seller. They don’t want to get burned more than they’re already going to be. Should you get turned down, have your buyer’s agent discuss the situation with the REO agent and find out how far apart you are. And if you like the house that much and can justify the acceptable price, go for it! But wait another 30 days so you don’t look too anxious. And a bank will not sign a counter-offer until all stipulations and terms are agreed upon.

It makes a big difference whether you want to live in your new foreclosure buy or if you’re going to flip it.

If you plan to live there for at least five years, chances are the value of the house will rise.

But if you plan to flip the house within the next year, you need to pay very close attention to the real estate market. Even if you get what you consider a “steal,” that price could still be considered high if things don’t improve quickly. So forewarned is forearmed.

By Patrick Roberts