Miyako Kiba, Manhattan

A:  Steven L. Einig, a Manhattan real estate lawyer, said that buying a property at auction should not be confused with buying a property that a bank owns after having taken a property back in foreclosure.

Mr. Einig said it appears that the letter-writer is referring to a purchase of bank-owned property rather than the purchase of property at auction.

"Foreclosure World gathers lists of properties owned by thousands of banks and other mortgage companies, sorts and compiles them into state and county directories, then offers their lists to investors and the public for a small fee," Mr. Einig said, adding that they are neither brokers nor agents of the banks. "you can purchase comprehensive directories from Foreclosure World or you can try contacting individual banks. However, many will not deal directly with the public and many also charge a fee for their lists. In any event, the fees charged are limited to the cost of the directories, not any commissions."

Wendy Tarantino, the general manager of Foreclosure World in Norwalk, CT, said they company provides 12 updated monthly lists of foreclosed properties in the customer’s state for $299, plus shipping and handling.

When buying a foreclosed property form a bank, Mr. Einig said, the purchase price is negotiated between the buyer and the seller – just as in any other read estate transaction. A broker’s commission would be due only if a real estate broker was involved in the transaction, he said, adding that even then, the buyer would have to pay commission only if the broker was working exclusively for the buyer as a "buyer’s broker."

Accordingly, Mt. Einig said, the risks and pitfalls of buying a property from a bank are no different from those presented by real estate transactions from a realtor or homeowner.

On the other hand, he said, buying a property at a foreclosure auction does expose a buyer to certain risks.

"Most foreclosure auctions are cash only deals and are not subject to the purchaser obtaining financing, " Mr. Einig said, explaining that a successful bidder must usually pay for the property within 30 days of the auction. Moreover, he said, properties sold at foreclosure auctions are almost always sold as is, meaning that buyers can end up with broken boilers, leaking roofs and even existing tenants who may not be inclined to move out without a fight. With co-ops, he said, the purchaser is also responsible for unpaid maintenance charges, penalties and interest.