Is Helping Homeowners in Foreclosure “Ethical” Investing… or Taking Advantage?

[David Litt]

I had an interesting conversation recently that really made me stop and think.

A fellow investor told me they avoid buying from homeowners in foreclosure because they feel it’s “taking advantage of people in crisis.” On the other hand, another investor argued that buying distressed properties helps homeowners by giving them a way out when no one else will.

Two completely different perspectives. Same situation.

Here’s where it gets tricky:

• Some sellers are truly relieved to have a fast, clean exit.

• Others feel pressured and walk away feeling like they lost.

• And investors, depending on their approach, can either build trust or burn bridges.

So, I’m curious how the community views this:

• Do you think buying from distressed homeowners is helping or exploiting?

• Have you ever walked away from a deal because it didn’t “feel right”?

• Where do you personally draw the ethical line?

[Dominic Mazzarella]

Quote from @David Litt:

You make a really good point, Dominic. By the time it reaches foreclosure, the major financial hit has already happened—the real decision often comes down to whether they minimize the damage or let it spiral. Pride definitely plays a big role, and unfortunately, I’ve seen homeowners choose to “lose big” rather than confront the situation early.

That’s why having open conversations and offering clear, judgment-free guidance as early as possible is so important. Sometimes just knowing there are options can help people avoid the worst-case scenario.

I couldn't agree more. I think it's helpful to understand the psychology a little bit that goes into folks making these decisions.