I have not bought them, but have been warned often to stay away. We asked our landlord, who owns many SD rental properties and started his career with buying foreclosures here in the 90’s, and he said, “Foreclosures are nothing”. The price is too high now. Buyers bid them up, thinking they are getting a good deal.

Now, foreclosures might start off at 10% below market value, and are bid up to market value.

Privatebanker had a post a while back, where he described REOs going for 20 cents on the dollar. There will be a time you can buy foreclosures at 50% off. In a few years.

Foreclosures don’t allow you to do a home inspection. Would you catch the IRS liens? Can you do a title search? Preview and inspect the house? I’m not sure.

With the big RE boom came many books advocating foreclosures, crowding out the market. Some years back, a handful of investors came to auctions, and now you’ve got hundreds of people. This demand pushes up the price.

Wait until banks own hundreds of properties and are willing to discount them heavily, as in the 90’s.