Is Buying A Short Sale, Foreclosure Or REO Home Too Risky?

Whether you’re looking for a bargain on your first home, hoping to score a great deal on a bigger house, looking for a house to flip, or investing in another rental property — your attention is focused on foreclosures.

But is it a good idea or way too risky to buy a home in foreclosure?

Everyone might be telling you it’s crazy to buy a distressed property.

You certainly understand plenty of things could be wrong with a house someone isn’t paying for. But you also want to do your research before you accept that they’re all “money pits” or dumps.

Read on to learn more about the foreclosure process and the pros and cons of buying a home in any stage of foreclosure.

What are Foreclosure Properties?

When a homeowner misses their mortgage payment for multiple months, their mortgage may go into default. Their lender then has the right to “call” the loan and require payment in full for whatever is owing on the home.

At that point — even if they still occupy the house — the home is in pre-foreclosure.

A homeowner may request from their lender, the ability to sell the home for less than what’s owing, known as a short sale. (Note: not all short sale…