Buying Foreclosures and Making a Profit

Buying & Selling Real Estate
1dFollow

Buying Foreclosures and Making a Profit

John Leland
Specialist · I give advice - [email protected] - I focus on states where investing is profitable, reasonably safe & secure · Member since 2026 · 148 posts · 48 votes

Pre-foreclosures, Foreclosures, Auctions, REO are all different phases of the same property within the process. It differs state by state. Bankruptcy falls into "usually" either chapt 7 or chapt 13 and have their own set of rules that are federal (nationwide).

The foreclsoure process is different in California vs Florida vs Texas.

To understand the process, the if-then-else sequences ( various things & timelines that can happen during foreclosure and during bankruptcy that affect the outcome) you have to either have a chart, someone who has been chasing foreclosures for a while or an attorney explain it to you.

It's the most complicated type of purchase to make and can be very profitable or it can be a can of worms.

I've seen properties take a year or two to get to the point where it would be a good deal to buy and I've seen properties where the process destroys any deal there may have been.

If you choose to chase Pre-foreclosures, Foreclosures, Auctions, REOs, timing and auctions determine whether it's a good choice or a waste of time. Most of the time "it's a wait and see" situation.

In any scenario, the owner has to be cooperative if it's worth buying and they are usually in denial and the property usually has deferred maintenance.

0Reply
209 views

5 Replies

Jump to latestLatest
  • Diana KhanPro Member
    Attorney · 10451 Mill Run Cir #755 Owings Mills, MD 21117 · Member since 2024 · 626 posts · 214 votes
    23h
    Quote from @John Leland:

    Pre-foreclosures, Foreclosures, Auctions, REO are all different phases of the same property within the process. It differs state by state. Bankruptcy falls into "usually" either chapt 7 or chapt 13 and have their own set of rules that are federal (nationwide).

    The foreclsoure process is different in California vs Florida vs Texas.

    To understand the process, the if-then-else sequences ( various things & timelines that can happen during foreclosure and during bankruptcy that affect the outcome) you have to either have a chart, someone who has been chasing foreclosures for a while or an attorney explain it to you.

    It's the most complicated type of purchase to make and can be very profitable or it can be a can of worms.

    I've seen properties take a year or two to get to the point where it would be a good deal to buy and I've seen properties where the process destroys any deal there may have been.

    If you choose to chase Pre-foreclosures, Foreclosures, Auctions, REOs, timing and auctions determine whether it's a good choice or a waste of time. Most of the time "it's a wait and see" situation.

    In any scenario, the owner has to be cooperative if it's worth buying and they are usually in denial and the property usually has deferred maintenance.

    @John Leland, I agree that timing and understanding the process are important when buying foreclosure properties. I'd also pay close attention to the title, any outstanding liens, and whether someone is still living in the property. A deal might look good based on the purchase price, but those details can make a big difference in what happens after the sale.

    I'm a real estate attorney and investor based in Maryland, and I work with clients on property transactions, contracts, and real estate matters. I've seen how important it is to understand the legal issues surrounding a property before moving forward, especially when the transaction isn't straightforward.

    I appreciate you sharing this, @John Leland. Foreclosure investing is definitely an area where doing your homework matters. It's closely related to the work I do, and I'm happy to stay connected!

    [email protected]240-266-0291
    0Reply
  • Jimmy Samaha
    Staten Island, NY · Member since 2013 · 75 posts · 26 votes
    17h

    Agree it's the most complicated way to buy. Here in New York it's judicial, so a foreclosure can drag 2 to 3 years before it ever hits the auction, and a lot of the better deals I've seen were actually short sales or pre foreclosures where the owner just wanted out before it got that far.

    At the auction itself the big thing people miss is title. You're usually buying with no inspection and a big deposit due that day, and sometimes there are liens or a senior mortgage that survive the sale. I always tell people to have an attorney run title before they bid, and assume the house needs more work than it looks like from the street.

    0Reply
  • John Leland
    OP
    Specialist · I give advice - [email protected] - I focus on states where investing is profitable, reasonably safe & secure · Member since 2026 · 148 posts · 48 votes
    16h

    Quoting @Diana Khan, Quoting @Jimmy Samaha

    Out west where I buy pre-foreclosures, you have to be patient, knowledgeable, get title reports before buying, and know the timing and options. Even then it can surprise you with the twists and turns.

    I’ve done well with then over the years and usually buy before the sale. But, it’s often a bet on a poker game.

    0Reply
  • Divin KanyamaBusiness Member
    Accountant · Seattle, WA · Member since 2025 · 525 posts · 223 votes
    16h

    @John Leland That is an important distinction. Pre-foreclosure, foreclosure, auction, and REO are not interchangeable deal types; they are different points in a process, and the rights, deadlines, and risks can change materially by state and even by the specific facts of the case. Bankruptcy adds another layer because the automatic stay, the chapter filed, and court approval requirements can interrupt or reshape the foreclosure timeline.

    For an investor, the opportunity is less about finding a “distressed property” and more about understanding which problems can be priced, resolved, and controlled. Title defects, senior liens, redemption rights, occupancy, deferred maintenance, access limitations, and an uncooperative owner can quickly erase an apparent discount. A disciplined buyer needs a state-specific process map, reliable legal and title support, conservative repair assumptions, and clear walk-away criteria.

    Patience may be the real competitive advantage. Many prospects will never become actionable deals, so it helps to treat the pipeline as a long-cycle portfolio rather than depend on any single property. When the timing, title, condition, and seller cooperation finally align, the returns can justify the effort—but only when the investor is willing to wait, verify every assumption, and walk away when the risk cannot be contained.

    [email protected]
    WEMBO CPA532 Reviews
    WebsiteView Page
    0Reply
  • Dan Worth
    Pittsburgh, Allegheny County · Member since 2026 · 31 posts · 12 votes
    1h

    To add a Pennsylvania data point: it's a judicial state, so every foreclosure starts as a court filing you can look up. That makes the early pre-foreclosure window much easier to see than in non-judicial states. In Allegheny County alone, 1,258 properties had a mortgage foreclosure filed in the last 12 months, but only a small share of those ever actually sell at sheriff sale. Postponements are constant, and many cases end in a payoff, a loan modification or a private sale before the auction date. So if you watch the filings and not just the auction list, you're usually talking to owners while they still have options.

    0Reply
Join the conversationCreate a free account to reply, vote on answers and follow this thread.
Log InJoin for Free