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Buying a Foreclosure Home? Be Careful of Distressed Neighborhoods

Real Estate Investing in Foreclosures, Motivated Sellers, REOs, Wholesale Deals, Pre-pre-foreclosures, Post-bankruptcies, Bankruptcies and Landlord Buyer Leads.

A foreclosure home could seem like a fabulous investment. It is important to look at more than the house and the price tag, though. Researching the neighborhood is a very important part of the process if you are buying it as a financial investment.

Author: John Christian David
Date: Jul 23, 2009 - 12:46:27 PM

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A foreclosure home could seem like a fabulous investment. It is important to look at more than the house and the price tag, though. Researching the neighborhood is a very important part of the process if you are buying it as a financial investment.

Distressed Neighborhood Concerns

A distressed neighborhood will depreciate in value. If something is going on in the area such as an increased crime rate, a high unemployment rate, high rate of high school dropouts, high statistics of single parents or poverty or some other local issues, what looks like a great deal in theory might suddenly not look so hot to an investor.



Part of buying a power of sale or foreclosure home could be that you are hoping to buy a home worth significantly more than you are paying for. Be careful of the neighborhood otherwise that home could get revalued at a much lower dollar figure than you are expecting.

Research the areas you are looking at when buying a foreclosure home to protect yourself and your investment.

The Three Stages of Foreclosure

Pre-foreclosure is the period of time before the lender forecloses on your home. If you are the homeowner, you need to act fast if you want to avoid getting to the next stage. You need to refinance, make payment arrangements or sell your house. You need to get the money owed to your lender or your house will be lost due to foreclosure.

During foreclosure, your property is seized. A notice of default is generally sent and the homeowner is has a reinstatement period where they have time to make arrangements or pay the lender their fees. If you cannot do something during that reinstatement period, you will be evicted from your home.

After foreclosure happens, the house is sold, most often at a trustee sale where the house is sold for a deeply discounted price. Many people look for foreclosure sales to save a significant amount of money on buying a home. Foreclosure listings services are available for free and for a fee.

If you are planning to buy a foreclosure property it is a good idea to consider the home repairs beforehand. At times the house will require minor repairs but it is possible that the house could require major repairs as well.

When a house is foreclosed it is most often due to financial hardship by the family who owned it. In this case, sometimes people have had a long and difficult period in their lives financially so could not keep up on the house’s maintenance requirements. This might have led to damage that could be costly to the new owner.

When buying a foreclosure home, it could seem like a steal of a deal but it is important to look at the potential for repairs needed to make the home livable or make the house able to be sold quickly for a profit. Estimating the repairs needed is an important part of your budgeting when making an offer on a foreclosure home.

If you are browsing foreclosure listings, you are hoping for a foreclosure jackpot. There are quite a few deals out there that seem hard to believe.

Nearly all people who lose their homes do so due to financial hardship and as a result, the home could be sold for a fraction of its worth and could exist in a neighborhood that’s a prime area for growth and appreciation. This is a foreclosure jackpot.

You want a home in fine repair in an area that is not considered a distressed neighborhood and if you find the right place, you can make a mint on it when you sell it OR it could be that you have found yourself your dream home and are saving thousands off the typical sell price of a home of that caliber.

This is why so many people pay for foreclosure listing services; so they can find a great home at a great price!

View all articles by John Christian David

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