There are several advantages of buying foreclosures in the real estate space. Before we get into those, we feel it important to point out one big risk; if you assume that a foreclosure is a good deal, just because it is a foreclosure, you could lose a lot of money.

The real estate market is going in the wrong direction (down) at this point in time and foreclosures are on the rise. Another way of looking at it is that real estate is “on sale”. Prices are lower than they have been in years and if you believe, as we do, that real estate will go back up in value, not may be the time to buy. Here are some advantages of buying foreclosures:

1) Often, you will be able to buy foreclosures at a percentage below current market value. This assumes that the asking price from the lender has not been over-inflated! So, you must still do independent research.
2) You don’t have to deal with the emotions of a sellers who are about to lose their home. When it comes to dealing with a bank, it’s all “dollars and cents” and they take the emotion out of it. The offer works, or it doesn’t and you usually know very quickly. For you, it’s “dollars and sense”. If it makes sense and you can afford it, go for it. If it doesn’t make sense, forget that property and go on to the next.
3) Condition of the home is important and very often, lenders go to some effort to repair the house. Conversely, if you are buying from a distressed owner, they have been known to damage the house prior to leaving it vacant.
4) With foreclosures, lenders know they need to maximize exposure and often deal through a real estate broker. This can be to your advantage using a middle-person in the transaction.

Lastly, if you are serious about a foreclosure purchase, be prepared to act quickly as they sometimes don’t last long. Do your research; know the values in the area, know the local area risks and market strengths and when the opportunity presents itself, ACT!