Five Game-Changing Facts to Know Before Buying a Foreclosure

Foreclosure properties can sometimes offer the best prices on the Market and it’s why they are highly sought after by investors. Due to the nature of foreclosure situations a lot of times the property is in the state of neglect and at the right price you can find a home that can be renovated into something spectacular and leave you with lots of equity to take advantage of. These are the five things you need to know before buying a foreclosure.

1. Buyer Beware

More often than not investors have to buy properties without getting a good look at the inside condition; especially if you buy a property at an auction. It’s not out of the ordinary for Real Estate investors to buy a house site unseen and base their offer solely on comps for resale value. If there’s a house going up for auction with a starting bid of $200,000 in an area where the average property sales are sold around $500,000, investors who know their material costs can come up with a number to purchase said property without even seeing it. 

As a buyer you should assume that everything in the property needs to be renovated or replaced. The best strategy to determine how much to pay is to look at fully renovated properties in the area you plan to buy and see what your house will sell for after you renovate it in the end. Find the comps for the fully renovated properties that you are going to transform this property into and then work backwards to determine how much money you’re going to spend on construction materials and ultimately what is the best offer you can give the bank. 

2. Every Sales Are “As-Is”

Whether buying at a real estate auction or on Market, if you’re buying a foreclosure the contract will be written that this is an “as-is” sale. What that means is once a price is agreed upon there is going to be no more discussion about terms or condition of the property. There will be no repairs made by the bank, there will be no negotiation on terms, and there will be a predetermined expectation for the length of time needed to close the sale. 

It’s not uncommon for a sale to end once it gets to your attorney to review the contract. Many times a buyer tries to buy a foreclosure and once the contract is sent over to the buyer’s attorney and the bank’s attorney says they will not negotiate anything in the contract, the buyer second guess is the situation and backs out. If you understand that every sale of a foreclosure is a standardized process with no negotiable terms of agreement then you can control the fear that can hit you once the contract is sent over to your attorney. 

Besides, if you used the strategy above and calculated your numbers correctly there’s nothing to be worried about because your property will be more valuable at the end of this project. 

3. Occupied Properties Are Very Common.

It’s very common to find a foreclosure sale sold with an occupant who might or might not have the right to be there. In most states once you are foreclosed on you lose the right to be in the property. Understand first that it’s pretty hard for a bank to foreclose on a property and in most circumstances the bank tries to offer the borrower options before pursuing foreclosure. Loan modifications are offered, sometimes interest only mortgage payments that can be less than $1,000 a month are offered to the borrower, or even reverse mortgage options depending on the situation. Sometimes a failure to negotiate takes place and the foreclosure proceeds. 

Now as an investor you have to be prepared to take on the burden of removing this person from your new home. If the person living there has an active lease that is not expired then don’t expect them to leave willingly. Smart investors often buy out the tenant by offering them a lump sum cash payment usually equivalent to three or four months rent in exchange for them vacating the property and handing over the keys. If you find yourself fortunate enough to have a person who’s willing to negotiate then that might be a great option for you to get the property vacant. Otherwise you have to go through the court system and depending on what state you’re in the length of time will vary. Most states will honor an active lease so it would be beneficial for you to find out if the person occupying the property is a tenant or the former owner. 

Smart investors try to knock on doors and have conversations with people to see who they are and what they’re thinking before purchasing an occupied property. If the person living there is the former owner and they’re having some sort of financial hardship, sometimes the investor will help them relocate and just work that cost into their numbers. Other times you might have a person who’s simply not willing to negotiate and nowhere do you get to live in someone else’s property for free so in those circumstances you have to get yourself an eviction attorney and start the process. 

Smart investors always base their offer to the bank on whether or not the property is occupied. So if you know the home has a person that needs to be removed then your offer will be lower then it would be if the property was vacant. 

4. Some Foreclosures Have An Owner Occupant Wait Period.

It’s pretty common for Fannie Mae or Freddie Mac to list their homes on Market with Realtors because they know they can get high offers going on Market. It’s actually pretty common for both Fannie Mae and Freddie Mac to have a wait period before selling a home to an investor. You might contact the realtor and they will tell you that there is a two-week wait period for investors because the sellers are going to prioritize selling the home to someone who plans to be an owner occupant. 

This happens for a couple reasons but mainly Fannie Mae and Freddie Mac are giving owner occupants the option to buy a home before investors take over and because they know if the person plans to live there then they will likely pay more than the investor. 

Real Estate investors are looking to make a profit in order to take on this massive task and risk of bringing the house back to life so selling to a person who plans to live there means the sale is likely to take place at a higher number since they might end up with some equity in the property but their end goal is to have a place to live and not to make a profit. Always check before buying a foreclosure on Market if there’s a wait period and then wait before you make an offer. Do not lie and tell the bank you plan to live there if you do not truthfully plan to live there. The bank will make you sign an owner occupant certification which will carry a penalty if you sell the property within a certain period of time. 

 5. Be Prepared To Pay the Seller’s Closing Costs.

In a foreclosure sale it’s almost guaranteed that the terms of the agreement in the contract are going to state that the buyer will pay for the bank’s closing costs in the sale. That means you’re going to pay for the bank’s attorney and anything else that might pop up in the transaction such as liens on the property.

 You might find a house in a foreclosure sale selling for $200,000 and during the title search you find out the property has $70,000 worth of credit card debt liens tied to it. Well you guessed it, you’re paying that $70,000. Smart investors usually do a preliminary search on properties with some sort of software such as or

Some of the foreclosure contracts might have a contingency in it that will let you get out of the sale after a title search discovers liens on the property but one thing that’s for certain is you will pay them and not the bank. If there’s no liens on the property then the seller’s closing costs are not going to be too high; there might be a realtor commission and an attorney fee to pay but overall the price of the property should still be low enough that it’s worth it to complete the transaction.

Keep these five tips in mind and you will have better success with buying a foreclosure property. For more advice on foreclosures contact Andrew Ragusa

About Andrew Ragusa

Andrew Ragusa is the CEO/Broker of REMI Realty in Plainview, NY( He is a Licensed Real Estate Broker, Sellers Representative Specialist, Accredited Buyer Representative, & Short Sale and Foreclosure Resource Specialist. Andrew is a regular in the media everywhere talking about real estate issues.

For more on real estate investing check out Andrew Ragusa on Instagram at


Contact Detail:

Company Name: Goldman McCormick PR, INC
Contact Person: Ryan McCormick
Email: Send Email
Phone No: 516-901-1103
City: New York
State: New York
Country: United States
Website Url:



  1. I simply had to thank you very much again. I do not know the things that I might have handled without the entire methods shared by you directly on my concern. It previously was a scary condition for me, however , being able to view the well-written avenue you processed that took me to leap over happiness. I will be grateful for your guidance as well as have high hopes you recognize what a powerful job that you’re accomplishing training other individuals by way of your web blog. More than likely you’ve never come across any of us.

  2. Once I initially commented I clicked the -Notify me when new comments are added- checkbox and now each time a comment is added I get four emails with the same comment. Is there any way you possibly can remove me from that service? Thanks!

  3. I would like to get across my respect for your kindness supporting men who have the need for guidance on this particular concept. Your very own commitment to passing the message all through appeared to be unbelievably significant and has surely permitted people just like me to attain their dreams. Your own invaluable recommendations can mean a great deal to me and especially to my mates. Regards; from each one of us.

  4. I needed to put you this little bit of word so as to say thank you yet again for your pretty views you have contributed above. This has been quite tremendously generous of you to supply unreservedly exactly what most of us could have made available as an e book in making some bucks on their own, precisely since you could possibly have done it if you desired. These tips additionally served as a great way to be sure that some people have the identical desire similar to mine to figure out significantly more around this problem. I am sure there are millions of more pleasurable occasions in the future for many who examine your site.

  5. Thank you a lot for providing individuals with a very remarkable possiblity to read from this website. It really is so cool and as well , stuffed with fun for me personally and my office friends to search your website a minimum of three times every week to learn the latest issues you have got. And definitely, I’m always fulfilled considering the cool hints you give. Some 2 facts in this article are unquestionably the most suitable we’ve had.

  6. I have to express my appreciation to this writer for bailing me out of this scenario. Just after researching throughout the online world and getting things that were not powerful, I believed my entire life was done. Living without the strategies to the problems you have solved by way of your good blog post is a critical case, as well as the ones that might have adversely damaged my entire career if I had not come across your web blog. That knowledge and kindness in handling all the details was excellent. I don’t know what I would’ve done if I had not come across such a point like this. I can also at this point look ahead to my future. Thanks for your time very much for the specialized and effective help. I won’t be reluctant to propose your web page to anyone who would like guidelines on this subject matter.

  7. I simply needed to thank you so much once again. I am not sure what I could possibly have used in the absence of the entire information revealed by you over that area of interest. It actually was a real troublesome scenario in my opinion, however , observing this skilled avenue you managed that made me to weep for contentment. I will be thankful for your help and then hope that you recognize what an amazing job your are putting in training people today with the aid of your webblog. I am certain you haven’t got to know all of us.

  8. I want to express my love for your generosity supporting people who really want assistance with your concept. Your very own dedication to getting the solution along became extremely practical and has constantly helped employees much like me to reach their dreams. The useful tips and hints signifies a great deal to me and somewhat more to my peers. Thanks a ton; from everyone of us.

  9. There are some attention-grabbing points in time in this article however I don抰 know if I see all of them middle to heart. There may be some validity however I’ll take hold opinion until I look into it further. Good article , thanks and we would like more! Added to FeedBurner as well

  10. I am just commenting to make you understand of the fine experience my wife’s girl encountered checking your blog. She mastered such a lot of details, with the inclusion of what it is like to have an awesome helping nature to get others quite simply master a variety of specialized things. You really did more than readers’ expected results. Thank you for imparting these powerful, trusted, revealing and fun tips on this topic to Sandra.

  11. I simply wanted to say thanks again. I do not know the things that I would’ve made to happen in the absence of the basics revealed by you directly on this problem. It truly was an absolute depressing crisis in my opinion, nevertheless looking at this skilled mode you managed that forced me to leap over gladness. I’m just thankful for your service and as well , pray you recognize what a great job you’re undertaking training many others via your web blog. I am sure you’ve never come across all of us.

  12. My husband and i ended up being so delighted when Albert managed to finish off his researching using the precious recommendations he received through your web page. It is now and again perplexing just to possibly be giving freely methods which often a number of people have been trying to sell. And now we remember we need the blog owner to be grateful to because of that. The specific illustrations you made, the simple site navigation, the friendships you make it possible to create – it’s mostly overwhelming, and it is aiding our son and our family reckon that the theme is brilliant, which is certainly highly fundamental. Thanks for everything!

  13. Thanks so much for giving everyone an extraordinarily brilliant chance to read critical reviews from this web site. It really is very pleasant and also stuffed with amusement for me and my office colleagues to search your blog no less than three times in 7 days to find out the fresh secrets you have got. Not to mention, we’re actually astounded concerning the attractive points you give. Some 4 ideas on this page are unquestionably the most beneficial we’ve had.

  14. Can I simply say what a aid to find someone who actually knows what theyre talking about on the internet. You undoubtedly know easy methods to carry a problem to mild and make it important. More folks must read this and perceive this aspect of the story. I cant imagine youre not more well-liked because you undoubtedly have the gift.

  15. I am only writing to let you know of the remarkable discovery my cousin’s daughter had visiting the blog. She realized lots of pieces, with the inclusion of what it is like to possess an excellent helping heart to make other people with no trouble comprehend chosen complex topics. You really surpassed my expectations. Many thanks for offering those precious, healthy, revealing and even unique guidance on the topic to Mary.

  16. Aw, this was a very nice post. In thought I want to put in writing like this moreover ?taking time and precise effort to make an excellent article?but what can I say?I procrastinate alot and in no way seem to get something done.

  17. An interesting dialogue is worth comment. I think that you need to write more on this subject, it won’t be a taboo subject but generally individuals are not sufficient to talk on such topics. To the next. Cheers

  18. Nice post. I study one thing more difficult on totally different blogs everyday. It’s going to always be stimulating to learn content from different writers and follow somewhat something from their store. I抎 favor to use some with the content material on my weblog whether or not you don抰 mind. Natually I抣l provide you with a hyperlink in your web blog. Thanks for sharing.

  19. Can I simply say what a aid to search out somebody who actually is aware of what theyre talking about on the internet. You positively know find out how to convey a difficulty to mild and make it important. Extra folks need to learn this and understand this facet of the story. I cant consider youre no more in style since you undoubtedly have the gift.

Leave a Reply

Your email address will not be published.