5 Common Misconceptions About Buying Foreclosed Homes

5 Common Misconceptions About Buying Foreclosed Homes

Image titleForeclosed homes are not all the same. When it comes to buying foreclosed properties, you should know the truth before you decide on a property to buy.


Buying a foreclosed home can be a difficult, especially since foreclosed homes often come along with additional worries that might not affect regular homes. Although buying a foreclosed property might be a good deal in some cases, in others it is not. Here are some of the most common misconceptions about buying foreclosed homes.


When you decide to purchase a foreclosed home, it is important to make sure that you are doing it for the right reasons. Many people who lack experience with buying and selling real estate automatically believe that foreclosed homes offers the best deals. If you have never shopped for a foreclosed home before, you should understand that the majority of foreclosed homes are not good deals. 

However, for a real estate investor or a first-time homebuyer with few other options for purchasing a home, a foreclosed home might offer an opportunity. Here are some things to consider if you are considering purchasing a foreclosed home to help you separate the truth from the misinformation that is out there.

Every Foreclosed Property Is a Good Deal

Many homebuyers and would-be real estate investors mistakenly believe that every foreclosed property is a bargain. This is not true for a number of reasons. First, the home may have had significant issues prior to the foreclosure that the previous owner never bothered to address. The home may have structural, plumbing, electrical or other issues that could be quite costly to fix. The original homeowner likely will have never dealt with these issues as a result of already struggling to make the mortgage payments on the home.

“You should also aware that banks almost always have addendums to a sales contract that are designed to protect their own best interests. When you purchase a foreclosure it is always on an “as-is” basis.” says Monte Mohr, a real estate agent based in Nashville, Tennessee. “That means that any repairs that must be done to the home, and any outstanding liens of the property, become your responsibility. In simple terms, the bank will assert that they have no knowledge of the condition of the property and then they will relinquish all accountability for any necessary repairs/liens – including the cost.”

Every Foreclosed Property Sells for a Low Price

While some lenders may price REOs so that they will sell quickly, this most often occurs in the cases where the home has been in the bank’s portfolio for some time. In fact, the majority of foreclosed properties actually sell for only slightly less than market value. With only a slight discount on market values and the probability that the homes will need significant repairs, there is a high likelihood that you won’t end up with as much of a deal as you thought you might in buying a foreclosed property.

The bank is out to make as much money as it can off of the bad investment. Therefore, it is highly unlikely that the home will sold at a low price just to give you a deal. If you want to know how the home stacks up against other homes in the area in terms of price, have your real estate agent do a comparative analysis of the foreclosed home with other properties in the area.

Every Foreclosed Property Is in Bad Shape

Just because a home has become a foreclosed property does not mean that it is in poor shape, Many foreclosed property have been vandalized, neglected or were in poor condition to begin with. However, that is not the case for every foreclosed property. In addition, some lenders may opt to renovate a property before auctioning it off to potential buyers.

Foreclosure Auctions Always Provide the Best Discounts

On occasion lenders host auctions to sell foreclosed properties in their portfolios. The common misconception is that these auctions always provide the best deals. An auction by nature means competition. With the popularity of foreclosure auctions on the rise, this increased competition can change bidding on a foreclosed property from a sure bet to just a possibility. In addition, you will also need to make sure that you have done your homework carefully to ensure that you don’t bid more than you can afford to pay while in the heat of bidding competition.

One way to beat the competition is to get in touch with a real estate agent. “A lot of these Realtors have a long-term relationship with these banks, and they know of listings that haven't even come on the list yet,” says Elaine Zimmerman, a Memphis real estate investor and author. “Call them about the listings that you're interested in, but also ask them about listings that may be coming up because sometimes it may take a day or two or even a week before a listing actually comes onto the database.”

You Have to Buy a Foreclosed Property to Get a Good Deal

If you are searching for a foreclosed property simply because you want a good deal, it is important to remember that great deals can be found in almost any market. You also don’t need to purchase a foreclosure to get a good deal. If you don't have much experience in buying homes or you don't have the skills needed to do renovation work, it is probably in your best interest to avoid purchasing a foreclosure.

Cara Balderas Headshot
Phone: 469-644-7124
Dated: April 5th 2017
Views: 480
About Cara: One of the biggest decisions you will make financially is what home to purchase. To find that perfec...

Property Search

RSS Feed

View our latest blog posts in your RSS reader. Click here to access. RSS

Search Blog

Recent Blogs

Feb 18 2018 55759 1 - How to choose the city you will
Low Inventory Pushes Home Prices Higher -   Low Inventory Pushes Home
Where Are Mortgage Interest Rates Headed In 2018 -   Where Are Mortgage
Now Is The Perfect Time To Sell - It is common knowledge that a

Our Bloggers

The Doyle Team * - 5
Comprar Casa DFW * - 4
Gabrielle Armstrong - 5
Cara Balderas - 73
Tami Bennett - 45
Ramon Bermudez - 4
Justin Blackburn - 1
Jessica Boozer - 18
Rhonda Borgne - 1
Olivia Borowski - 1
Jennifer Boyd - 2
Jamie Brannagan - 1
Annette Bruen - 47
Moira Brunken - 18
Beverly Bryant - 24
Ana Cantu - 1
Lisa Cardillo - 53
Bob Cardillo - 4
Lisa Carroll - 2
Lucina Cervantes - 11
Michael Chatman - 2
Gregory Cornett - 2
Angela Cotten - 97
Missie Craig - 12
Melisa Crooks - 1
Greg Cunningham - 2
David Darty - 1
Sarah Dieter - 9
Belinda Duff - 5
Eva Duffy - 8
Leah Ecob - 15
Kristine Edens - 3
Jill Elliott - 99
Laneal Ernest - 9
Nicole Espinosa - 27
Christopher Evans - 1
Heather Feragotti - 8
Mark Fischer - 2
Susan Florsch - 12
Jennifer Flynn - 9
Larry Frassinelli - 6
Chad Gabriel - 58
Shalee Garza - 10
Marcos Garza - 1
Tammy Gill - 1
Timothy Gilliam - 2
Christina Gonzalez - 5
Wilma Goodwin - 2
William Graves - 5
Roxann Hailey - 1
Jimmy Hanks - 1
Kristen Henderson - 2
Candie Hernandez - 9
Beth Herr - 1
Hunter Howard - 1
Bill Hurd - 3
Gary Hutchings - 20
Trenton Johnson - 15
Marla Johnson - 1
Felicia Johnson - 79
Dakota Joyner - 9
Sunil Kanjia - 8
Jemi Khan - 26
Leigh Klotz - 5
Amber L Johnson - 10
Michele Lafortune - 22
Maria Lopez-Jones - 1
Stacy Lynn Massar - 27
Chuck May - 1
Mikki Migis - 8
Richard Mikus - 1
Sean Moniri - 21
Naddia Morales - 10
Candace Mozingo - 1
Mark Mulch - 19
Steve Murray - 1
Julie Nicholson - 10
Nikki Okpuzor - 3
Alan Oliver - 7
Kaysone Orlando - 1
Holli Paddio - 3
JP Piccinini - 992
Julie Ann Pickering - 85
Ann-Marie Pope - 2
John Priestash - 56
Mimi Rader - 1
Shelia Randolph - 33
Teneka Ray - 1
Go 2 Girls Realty - 173
Kristi Roy - 1
Kelly Rumney - 9
Amy Jo Saenz - 3
Linda Scardis - 4
Sandy Setliff - 222
Christine Shannon - 30
Rene Sinclair - 27
Shelby Smith - 3
Rebecca Smith - 1
Bryce Smith - 5
(Allen) Mehrdad Solhjoo - 3
Monica Solkhon - 1
Malena Solorzano - 1
Rodrigo Sotomayor - 16
Drew Spears - 4
Jenna Stanley - 9
Tim Stoll - 52
Kelley Stubbs - 3
Melodie Sulgrove - 1
Seana Taylor - 217
Mary Taylor - 15
Kevin Taylor - 16
Julian Taylor - 17
Erica Taylor - 54
Angela Taylor - 1
Rosalia Tejeda - 1
Karla Terrell - 2
Michele Thompson - 6
Jason Todd - 24
Andrea Trimble - 55
Sarah Uber - 5
Diane Velez - 18
Debbie Viverito - 132
Rachel Walsh - 2
Nick Walton - 79
Spring Weeks - 9
Clint White - 2
Christopher Winkler - 2
Martina Worley - 2
Keisha York - 30
Audra Young - 1
Debbie Zurita - 17

Saved Properties

This is a list of your favorite properties. We will email you if a property is reduced or leaves the market.

Click 'Save' to add a property to this list.

Register / Login

New & returning visitors please enter your information to login.

By clicking 'register' you are agreeing to our terms of use & giving us expressed written consent to contact you.

Questions? Comments? Complaints?

This message will go directly to the head of our team.

Location & Address

JP And Associates REALTORS
6136 Frisco Sq Blvd, #200
Frisco, TX

Other Locations