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Is it a good idea to buy a house in foreclosure? 

By July 17, 2020September 1st, 2022Blog, Investing, Real Estate
Is it a good idea to buy a house in foreclosure?

Is it good to buy a house in foreclosure? Homeowners and real estate investors have tackled this issue for a long time, especially when inventory hits historic lows.

For real estate investors, foreclosures may be perfect for their next investment. Foreclosures are homes that are often undervalued, in need of repairs, and can close quickly.

Some foreclosures may even be zombie properties, which are simply homes that their owners have abandoned in the midst of a foreclosure. If you are looking to invest in foreclosures and take advantage of one of the best-kept real estate investing secrets, foreclosures may be a perfect option for you!

Why Foreclosures Can Be Great Investment

Foreclosures offer real estate investors the perfect opportunity to find investments! Are you still asking ‘Is it good to buy a house in foreclosure?’ Foreclosures offer investors flexibility for their investments, with undervalued properties, and motivated sellers. Foreclosures also offer a perfect opportunity to flip, rent, or even try a buy-and-hold strategy.

3 Ways To Invest In Foreclosures:

  1. House Flipping: Buying an undervalued property, making repairs, and selling for a profit.
  2. Rentals: Renting properties to tenants to make passive income, with either long-term or short-term rentals.
  3. Buy And Hold: Buying a property, and selling for a profit after waiting for an extended period of time for the value to increase.

When working with foreclosures, house flipping is a great opportunity! Zombie flips or house flipping a vacant foreclosed property is a favorite among investors. With undervalued properties and motivated sellers, these properties can pose High ROI.  Investors can make large one-time repairs to maximize the home value and appeal to new buyers.

Another way to invest in foreclosure is rentals. Depending on your area it may earn more over time with rental. Rentals earn higher passive incomes over time but require regular maintenance and repairs.

When buying foreclosures, some investors prefer to use a buy-and-hold method. Often this means holding onto a property and waiting for the market value to increase over time, and some may make repairs as time goes on.

So, Is it a good idea to buy a house in foreclosure? Investing in foreclosures offers more inventory, motivated sellers, and endless investment options, and is a great way to acquire low-cost properties. It is a perfect way to find properties in tight markets!

How to Find A Foreclosure

One of the hardest things about buying foreclosures is finding the foreclosures you want to buy. Foreclosures take a long time to process and to even be completed.  Zombie foreclosures, or when residents vacate a property before a foreclosure can complicate things further.

ATTOM Data Solutions stated that zombie foreclosures increased to 3.1% Percent Nationwide. According to the report, about 282,800 homes are in the process of foreclosure, with about 8,700, or 3.1% percent sitting empty as zombie foreclosures for the first quarter of 2020. Fortunately, it is easier than ever to find foreclosures for sale.

This Guide is especially helpful to tell if a house is in foreclosure.

Here are resources to help find foreclosures:

  1. Foreclosure real estate agent: Some real estate agents specialize in the buying and selling of foreclosure, and know-how to help you purchase foreclosures with minimal hassle.
  2. Check MLS: Check popular listing sites to find foreclosures in your preferred areas for investing, and to get more information on how to purchase a foreclosure.
  3. Property management Companies: Property management companies. These companies work closely with lenders, investors, and realtors. They may know of the local eyesores, or want to see a profit to come in from the properties they watch for the banks.
  4. Banking Sites: Lenders may have a list of zombie properties that are ripe for the picking. Realtors with access to the listing will know of the recent foreclosures or pending listings that may require a nudge to get listed.
  5. Auction companies: Auction companies often hold huge foreclosure auctions, sometimes selling hundreds of properties in a single day. Experts disagree about whether auctions are great places to buy foreclosures; sometimes the excitement of bidding falsely escalates prices, and there are risks to buying properties “as is.” But it is possible to find deals — as long as you do your homework.

By working with lenders, realtors, and local authorities who can easily locate and inspect the properties and start zombie house flipping.

How To Buy A Foreclosure With Foreclosure Auction Loans

There are many different ways one can purchase a foreclosure, such as foreclosure auction bids, or even just a regular real estate transaction. Since each foreclosure purchase option can vary so greatly, having the right funds for your foreclosure is vital to investing in foreclosures.

Before you have to find the right funds for your foreclosure it is important to have an investment strategy for your investment.  You should also estimate the cost of repairs (which you can do with our free home rehab valuator and your potential return on investment.

For foreclosures that are being sold in a standard real estate transaction, having quick funding, and a clear investment plan will make your bid more appealing. Real estate investors who are looking to close quickly, will often use hard money loans to fund their foreclosures investments. These asset-based loans use the underlying property value of the property, instead of credit, making them fast to approve and fund and are primarily used for investment. This means that hard money lenders won’t be scared away from a foreclosure unlike other lenders who may not see it’s full potential.

Buying At A Foreclosure Auction

Foreclosure auctions are unlike your standard residential sale. Foreclosures are sold, as is, where it is, and with any existing faults and limitations. For some investors, they may be too big of a risk to take without seeing the property. Foreclosures sold at auctions may be sold on an absolute basis (the highest bid wins, even if it’s for a tiny amount) or with a reserve or minimum bid (the property has to sell for at least a given price, otherwise the lender gets title). Like most auctions, the goal is to get the highest possible price for the property, to help negate the loss the lender may see from the property. For these types of sales, foreclosure auction loans can make it easy to bid on your property.

Most hard money lenders offer foreclosure auction loans, which make it easy to bid on homes in a foreclosure auction. While the details of when payments are required, and how the payments must be received vary for the foreclosure auctions, they are usually paid in cash for the full amount in a specified period of time. Therefore it is vital to be preapproved before you head to the auction, as many won’t let you bid without a preapproval letter.

If you need foreclosure auction loans, contact us here for more information. 


For Real estate investors, investing in foreclosures is a great way to make large profits on undervalued homes. In the right location and with the right repairs, investors can find homes in great markets, with minimal repairs. These make easy rentals, great flips, and have motivated sellers.

So,  Is it a good idea to buy a house in foreclosure?

    • Why Foreclosures Can Be Great Investment: Undervalued homes, motivated sellers, and new inventory. Foreclosures offer a great investment opportunity for any investor!
    • How to Find A Foreclosure: Zillow listed the best way to find your foreclosures, from checking listing services, calling banks and working with special foreclosure agents.
    • How To Buy A Foreclosure With Foreclosure Auction Loans: Whether your foreclosure is being sold in an auction, or a normal real estate sale, foreclosures are easy to buy with hard money loans. Asset-based loans with no credit checks, and can be funded in as little as 2 days! Perfect for foreclosure properties.

So do you think buying a house in foreclosure is a good idea?


Prime Plus Mortgages

Prime Plus Mortgages is a licensed hard money lender. We specialize in hard money loans, bridge loans, fix and flip loans, home rehab loans, for developers, property flippers and buy-and-hold strategists. HML programs make private money available for small to medium scale projects.