Thinking About Buying a Foreclosure?

3 min read

With the housing bubble burst and the subprime mortgage crisis, millions of homeowners found themselves unable to make their mortgage payments. Many found themselves owing more on the house than the home was worth. Many just walked away from their homes. As a result of these complicated issues, millions of homes were foreclosed.

While this isn’t the only reason for which homes are foreclosed, it has been a widespread one. With all the foreclosed properties, there has also been extensive interest in buying these properties at a bargain price.

It is true that foreclosed properties can be priced at a significant discount, but they are also a much riskier investment. Before making an offer on a foreclosed property, do your due diligence.

Things you must do before buying a foreclosure:

  • Do a title search – make sure that when you purchase a foreclosure that you are the only person who has any ownership claim
  • Check for liens – find out if there are any liens against the property because you will be responsible for paying them
  • Check for a second mortgage – you don’t want to be surprised by an extra mortgage that you will need to pay
  • Know how good of a “bargain” you’re getting – foreclosures are sold “as is” and in many cases you will not be able to do a proper inspection. You may end up paying thousands of dollars repairing the property before it is fit to be lived in.

It is also important to consider that there are different types of foreclosure properties and each type comes with its own advantages and disadvantages. The different types of foreclosure purchases are:

  1. Pre-foreclosure
  2. Auction
  3. Real Estate Owned (REO), also called “bank owned”


A pre-foreclosure is when you buy the home directly from the homeowner, before the bank officially forecloses. This type of purchase does not require as much capital as other foreclosures. Also, since you are purchasing straight from the homeowner, you will be able to gather all of the necessary information, such as inspection reports, title information, etc. that may not be available with other foreclosure properties. Once you take over the mortgage, you will be responsible for all future payments as well as any overdue back payments.


A foreclosure property will usually end up at an auction. Real estate auction practices vary by state but common practice is for the auction to be held on courthouse steps, in front of the foreclosed home, or at the county clerk’s office.

Real estate auctions offer the best chance for a great deal but also hold the greatest risk. Auction properties are sold as is, with no opportunity for potential buyers to perform inspections. When buying a home at auction, the buyer must pay cash, usually a cashier’s check. It is also possible that there may still be tenants living in the home. In such a case, you would be responsible for the often costly eviction process.


Once a foreclosure has gone to auction and failed to sell, it becomes a Real Estate Owned, or bank owned, property. Most homes do not sell at auction, most fail to even get any bids.

An REO property is the least likely of the foreclosure properties to represent a bargain, but it is also the least risky. The property can be fully inspected, any title issues can be found and dealt with, and the sale can be subject to a mortgage. REO properties also tend to be in better condition than other foreclosure properties.

Another thing to keep in mind when purchasing a foreclosure is that some states have a redemption period that allows the original owner to buy back the property by paying the remaining balance owed. You may be able to have this redemption period waived, so check the state laws on this topic before purchasing.

Still interested in buying a foreclosure property? If so, always do your research before purchasing!

Like this article? Share it

Share on facebook
Share on twitter
Share on linkedin
Share on pinterest

Want a Free Market Analysis?

Let us quickly and accurately assess your home's current value.

  • Spacious open concept
    floor plans
  • Up to 4 bedrooms
    2 full bathrooms (per plan)
  • Hardwood flooring by Shaw®
    in foyer, powder room
    & kitchen
  • Wall to wall carpet by Shaw®
  • Designer lighting fixtures
  • Solid oak stained railing
    (per plan)
  • Baseboard moulding
  • Two panel style interior doors
  • Brushed nickel handles
    & hinges
  • 12×12 porcelain floor
    & wall tiles in full baths
  • Walk in owner’s bedroom
    closet (per plan)
  • Ventilated closet shelving
  • Two phone & cable outlets
  • Smoke/carbon monoxide
    detectors per floor
    & bedrooms
Energy Saving
  • Air infiltration wrap
  • Exterior joint sealing
  • Double pane insulated
    vinyl windows
  • R-49 attic insulation
  • R-15 exterior wall insulation
  • R-30 insulation in overhangs
  • Energy efficient natural
    gas heat
  • Electric central air conditioning
  • Honeywell programmable
  • Kohler® water saver toilets
  • Kohler® plumbing fixtures
  • 1 & 2 car garage (per plan)
  • Low maintenance vinyl siding
  • Seamless aluminum gutters
    & downspouts
  • Elegant front door
  • Concrete leadwalks & stoops
  • Asphalt driveway
  • 2 hose bibs (per plan)
  • 2 exterior electrical outlets
    (per plan)
  • Exterior light fixtures (per plan)
  • Professionally designed
    exterior finishes
  • Custom paneled shutters
  • Doorbell with chime
  • Mailbox
  • Architectural shingles
  • Sod front yard
  • Pressure treated deck
    (per plan)
  • Public water & sewer
  • Professionally designed
    landscape package
  • Optional Grill Package
  • 42″ designer cabinets
  • Granite kitchen counters
  • Kohler® faucets
  • Stainless steel sink
  • Quality GE stainless steel
    appliance package
  • Generous storage pantry
    (per plan)
  • Ice maker rough-in
Exceptionanl Brands You Can Trust
Builder commitment
  • Hexa/L10, LLC
  • 2-10 Homebuyers Warranty
  • 10 year structural
  • 2 year mechanical
  • 1 year fit & finish
  • Manufacturer’s
    limited warranties

Detailed Welcome Package​

When you join the company, EXIT Realty will send you an Associate welcome package containing resources and materials to get you out of the gate quickly. It also contains a special gift, Born To Be Exceptional, and Accelerated Farming; The Advertising System That Never Fails, books written by Founder & Chairman, Steve Morris.​


MEMO (Managing EXIT’s Momentum Online) is EXIT Realty’s central database and the secure, online engine behind our unique business model, The EXIT Formula. MEMO tracks every EXIT listing and transaction, every closing, every region, brokerage and agent and every sponsorship (through retirement and death) across the continent. MEMO feeds appropriate information to the Resource Center, and select third party sources to ensure data integrity.

Exit's Resource Center (RC)

Much more than a warehouse of marketing and administrative resources, the RC is the private member’s area of accessible only to our Associates. In this information hub, associates can access all of EXIT’s technology resources as well as fresh content, best practices, and training resources. Associates can also view their own production and the production of the people they’ve sponsored.


The aim of EXIT’s Ancillary Network is to provide EXIT Associates with an exclusive selection of companies whose products and services can help to maximize your business. Our Premier Partners and Approved Suppliers are carefully reviewed and selected based on credibility in their industry, special pricing and/or unique offers as well as their ability to fill a niche for EXIT.


EXIT Promo Shop provides a huge selection of more than 4,000 marketing pieces to help you find, get and keep clients as well as sponsor agents. This powerful promotional tool makes it easy to create customized flyers, brochures, postcards and other marketing materials demanded by sellers and appreciated by buyers. EXIT Promo Shop also combines an exceptional contact management system with top tier online and offline drip marketing campaigns. EXIT Promo Shop Print contains a selection of marketing pieces and is free to all associates.


With EXIT Realty’s Expert Marketing Suite™, you have the technology you need to maximize your listing’s exposure and generate and capture leads. Included as a benefit of your EXIT membership at no additional cost, this suite includes a customizable, branded and unbranded virtual tour which is syndicated to popular real estate portals, a downloadable flyer, a custom website created exclusively for every eligible EXIT Realty listing with its own unique web address, a photo gallery, virtual tour and lead generation technology built-in, and more. EXIT Realty has also provided a marketing video to show prospective sellers how this technology will position their home above the competition. Every EXIT Associate has access to our Expert Marketing Suite™ when their brokerage has completed the MLS paperwork to allow us to import IDX data.


Get your contact information directly into the palm of a prospect’s hand by using EXIT’s Mobile Business Card™technology. Choose a vanity code which prospects can text to 85377 to receive your Mobile Business Card™ on their smartphone. The system notifies you when someone has requested your MBC and delivers their mobile number right to your phone. Your Mobile Business Card™ included as a benefit of your EXIT membership at no additional cost.


These valuable sessions provide best practices, tips and techniques. Recordings are available on-demand in the Media Library section of the Resource Center.


Included in EXIT Realty’s Expert Marketing Suite™, all EXIT associates have access to our Smart Sign™geolocation lead generation technology. Interested buyers can text EXIT to 85377 in front of any EXIT listing and instantly receive property information on their smartphone. The listing agent receives the lead on his or her mobile device. It’s all possible when the brokerage has completed the MLS paperwork to allow us to pull IDX data.


The EXIT Achiever is the exclusive corporate publication of EXIT Realty Corp. International. This comprehensive branding, listing, sponsoring and social media tool is made available to all EXIT Associates as a multi-functional promotional piece that crosses all marketing borders.


A Support representative can be reached Monday to Friday, 10 hours a day, by live chat through the RC, by phone or by email to answer questions and provide training on all of EXIT’s programs, tools, resources, and technology.


EXIT Realty’s corporate website features a comprehensive and easy-to-use home search. Leads generated on EXIT listings are emailed directly to the listing agent. Leads on properties listed by other companies are emailed to an EXIT brokerage determined by our detailed algorithm as the best one able to help the customer. No additional fees are charged by EXIT Realty Corp. International on any leads generated from Also, all of EXIT’s technology is accessible on any mobile device.


A portion of every transaction fee received by EXIT Realty Corp. International is pledged to its non-profit organization of choice, and to-date $3.5 million has been pledged to Habitat for Humanity. In addition EXIT Realty recognizes that a person’s emotional, physical and spiritual well-being are keys to their overall quality of life. To this end the company’s Focus on Good Health initiative includes a series of articles, tips and tools promoting wellness at work and home. Visit to find out more.


we'd love to have your feedback on your experience so far