Pros and Cons of Foreclosures

Investing in foreclosures is certainly one of the best ways to make money in the Phoenix real estate market. But just like any investment, there are certain risks involved. Foreclosed properties offer great potential to purchase at far below the market value of the property, but there can be underlying lien issues, hidden damage to the property, long term carrying costs and renovation and repair costs. It is best to work with a real estate foreclosure specialist if you are considering making your first investment in a foreclosure property.

Clearly, it is critical to completely research the property that you are considering purchasing. Determining the stage of foreclosure is important. Pre-foreclosure offers a discount of 20-40% of the value of the property due to the equity that the buyer had built up. Normally the down payment is low and the sales terms can be negotiated. The downside is that the competition for these great deals is very high. And if the owner is not reachable, you might discover later that there are additional lien issues.

The auction stage is actually the most profitable stage to purchase a foreclosure, with discounts being as high as 35-50%. That means that you can expect a high return on investment. The downside is that most auctions require either a high down payment or cash paid in full and you might be purchasing a houseful of issues. You normally can’t get a home inspection and you have to take what you get. A mistake on a home bought at auction can be very costly. And finally, you might not win the auction and you leave empty handed.

Do the research and learn how much potential there is in foreclosure investments in Phoenix. You will be surprised at the potential but will understand why it can be so difficult to find a good deal that will provide a good return. What used to be a well-kept secret is now common knowledge in the real estate investment market. Single family homes, multi-unit properties and commercial buildings of all sizes end up on the foreclosure market and are in demand.

There are many different factors to consider when you are looking at foreclosed properties as an investment. If you are not familiar with the process or the industry, then the help of a foreclosure specialist can be the difference between making a very bad purchase that could cost you thousands of dollars and making a wise investment that will quickly turn you a profit. Visit the pros at to see all of the services they can offer you. Having their guidance during your first few foreclosure purchases will give you peace of mind from a highly skilled professionals experience and knowledge.

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