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Buying Foreclosures - Is It A Good Deal?

If you’re tuned into real estate investing talk, you hear it all over the place. “If you want a good deal, consider buying foreclosures” But are these deals really as good as they seem?

Buying foreclosures can be an easy way to get a good deal on a property but there are a lot of disadvantages that go along with them.

Once a property goes into foreclosure, the lender has control of it and you no longer have the chance to deal directly with the owner. You may work with a single person on the deal but it is the bank and it’s motives behind the sale.

Usually if you’re buying a foreclosure or property at auction, you don’t get the chance to inspect it. It is purchased as-is. You can only imagine what issues you might have. The savings that you receive by purchasing the foreclosed home may be used up in needed renovations. Many times the current owners or tenants will retaliate and mess up the home before they leave. Sometimes the residents refuse to leave and you are stuck with the problem of removing them from your property.

During the foreclosure period the current owners have what’s called a period of redemption. Within that time frame they can cure the default by paying all the back payments and costs associated with the foreclosure up until that time. It could be very frustrating to be excited about buying a foreclosure and at the last minute have it taken away from you.

The best time to get a distressed property is just before foreclosure, when you have the opportunity to deal with the owners. This is called pre-foreclosure. You can make a very low offer and their motivation is such that they may take whatever they can get to be done with the problem and make a little money on the deal.

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