Operations
Find Your Next Deal for Far Below Market Value FORECLOSURE PROPERTIES OFFER LARGER MARGINS, BUT BE MINDFUL OF THE RISKS.
GAYLENE ROGERS LONERGAN
W hether you’re a homebuyer or real estate investor, foreclosure properties offer you the opportunity to purchase real estate at below-market prices. You can potentially save thousands of dollars, and this process often provides immediate equity and excellent investment potential. However, you’ll need to navigate complex legal issues (that vary significantly from state to state), understand unique risks, and move quickly when opportunities arise. Sound potentially rewarding? BIG PICTURE Foreclosure occurs when a homeowner defaults on their mortgage, and the lender takes legal action to recover the
loan balance. The foreclosure process varies by state, with some requiring court supervision (judicial foreclosure) and others allowing lenders to proceed without court involvement (nonjudicial foreclosure). After completing the legal process, these properties are sold at public auction or through real estate listings, often at prices that are significantly below market value. BENEFITS TO HOMEBUYERS Foreclosure offers a homebuyer several options. As mentioned, you can save money on the purchase because you may be able to purchase a home at 70-80% of the market value, creating immediate equity. There is also less competition from traditional buyers who choose to avoid foreclosure due to its complexity. And, you
may gain access to neighborhoods that could otherwise be outside your budget.
BENEFITS FOR REAL ESTATE INVESTORS
Likewise, real estate investors stand to reap potential benefits. For example, you may be able to achieve 20-30% annual returns by purchasing foreclosed properties. Consider also that buying foreclosed properties may help you build a portfolio more quickly. Finally, you have the option to flip properties for immediate ROI or hold them for rental income. CONSIDER THE RISKS TITLE ISSUES. Foreclosure properties can come with clouded titles, unpaid liens, or
24 | think realty magazine :: september - october 2025
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