The phrase “buyer’s market” is something that you may have heard before.  What does that mean?  In short, it means that there are more people trying to sell something at a specific time than there are people who want to buy it.  If you are interested in purchasing a bargain home, or one that has been through foreclosure, you will want to do this at a time that is considered a “buyer’s market”.  This is the time when you will have the widest selection to choose from, at the lowest prices.

Right now, at the beginning of 2010, the economy is still recovering from the recent housing crisis.  This means that there are still a lot of homes being sold that have been foreclosed, or that are bargain homes.  The amount of homes outnumbers the amount of people who are currently interested in buying them.  For that reason, it can be called a “buyer’s market”.  The time to buy is now!

Foreclosure is a legal term.  Someone buys a house, and then, for whatever reason, does not make the mortgage payments on time, or stops all payment. The bank wants to make money off of the interest that accrues as the person takes years to pay off the home loan.  The bank also wants to have the entire amount of money it first lent out paid back to it.  When a person stops making his or her mortgage payment, the bank cannot make a profit from the loan.  In order to stay profitable, the bank will repossess the home.  The home has now gone into foreclosure.  In order to try and recover at least some profit, the bank will attempt to sell this foreclosed home.  Often, foreclosed homes are sold in an auction.

A Bargain home is a more generalized term.  It refers to a home that requires a lot of repair work before someone can live in it.  It may also mean a smaller home, or a home that is in a less than desirable location.  It could mean a mobile home.

Purchasing a bargain or foreclosed home gives you the advantage of negotiating power. The seller is very motivated to sell.  You can buy these kinds of homes for a lower price than other homes.  The disadvantage is that often, the cost of the repair work required will exceed the savings you got from the low purchasing price.