Buying foreclosure property may give you great discounts; however, there are various underlying risks to it too.

Benefits

Pre-foreclosure home owners want to sell their houses in a hurry to avoid foreclosure, which gives buyers the advantage to purchase at a lower price. Banks are also looking to sell these foreclosed houses in a hurry and in a cheaper price, because the longer they keep these houses the more it costs them to pay taxes. Houses being sold in a hurry give you the power to bargain at a lower price.
Foreclosure houses these days won’t be sold at a very steep discount price due to the mortgage crisis, and the potential for a bargain is still there.
Buyers can purchase foreclosed home cheaper and with just a few repairs and upgrades, they can appreciate the value of the property.
If you buy a real estate owned (REO) foreclosed properties, the title of the house can be cleared and you don’t have to assume back taxes of liens.

Risks

Yes, foreclosed houses can give you significant discounts, but there will be steep competition too. There are also other pre-foreclosure homeowners who want to pay off their taxes, mortgages and other balances, making them sell the house at an even higher price. Foreclosure houses might give you liens from balance that wasn’t paid off by the previous owner.
If you are planning to buy a foreclosed house at an auction, you may have to pay in cash and there is a possibility that you won’t be able to inspect the house before you buy it, which can be very risky.
Foreclosure houses might need extensive repair, because the previous owner may not have the funds to get it fixed. There are also instances when buyers have to start eviction process to get the previous owners out of the house, and this may costs legal fees. Buying foreclosed house from a lender may not only be time-consuming, but it involves a process filled with red tape.

Related Posts
Landlord duties
If you’re a new landlord you have to know that being one is no simple matter. Aside from the identity of you tenants, you also have to be aware of ...
READ MORE
Discuss major real estate laws in the U.S.
Real estate laws has a broad legal area coverage regulated by state law, federal law, and common law. This law includes land and any immovable structures attached to that land ...
READ MORE
What to do when your tenant doesn't pay rent
The landlord has the right to evict the tenant especially when the tenant hasn't paid the rent on full and on time. However, the landlord has no right to evict ...
READ MORE
How a real estate attorney can help you during your home purchase
There are different kinds of real estate transactions such as commercial leases, residential rentals, single-family home, and investment property transactions. To make sure that your real estate transactions run smoothly, ...
READ MORE
Why buy investment property under an LLC
An LLC or a limited liability company will benefit you in many ways if you decide to buy real estate properties. That's because it will provide plenty of protection in ...
READ MORE
The landlord’s right in evict tenants
Every state in US has the unique Rent Control Acts and this is to be protected in the right manner surely. There should indeed be a valid reason behind everything ...
READ MORE
Workers Compensation: Different illness and injuries covered
Just because you work in a company that has workers compensation doesn't mean you're entitled for coverage right away. Although it's very unfortunate that you met an accident or that ...
READ MORE
Zoning laws – Avoid Zoning trouble
The primordial rule for business location is to never sign a lease for a business zone or space if you are not yet completely sure that you are legally allowed ...
READ MORE
Tenant Rights and responsibilities
Have you recently moved out and you’ve decided to move again into a rented residential unit? Did you know that the tenant rights made by the Federal and State bodies ...
READ MORE
Decide when you should file a lawsuit?
Before deciding to file a lawsuit, here are important things you should consider. First, determine if you have a good case. Reflect if you can accept compromise settlement, or if ...
READ MORE
Landlord duties
Discuss major real estate laws in the U.S.
What to do when your tenant doesn’t pay
How a real estate attorney can help you
Why buy investment property under an LLC
The landlord’s right in evict tenants
Workers Compensation: Different illness and injuries covered
Zoning laws – Avoid Zoning trouble
Tenant Rights and responsibilities
Decide when you should file a lawsuit?