What are the Problem’s With Buying a Foreclosed House?

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Purchasing a house that has been foreclosed may seem like a good idea at a first glance. Doing so can provide financial awards for both owner and investor parties involved. After all, a fixer upper can be turned into a beautiful home with the right amount of hard work and attention given, and sold for a significantly greater value than what it was originally purchased for. But there can be a lot of problems associated with foreclosed homes as well. We will discuss some of the most common problems you should be wary of when looking to purchase a foreclose home.


For foreclosed properties, damages stemming from neglect can be quite common. Vandalism might be expected on the property, especially if it resides in an area with a relatively high crime rate. While this vandalism may be random, it could also come from the owner themselves. If the former owners have a falling out with the bank and are locked out of their property it is possible that they might damage the house themselves out of spite, or break into the home after being locked out to retrieve their belongings.

Revenge against the bank from the owner could potentially cause even more harm to the home, as the owner might decide to remove valuable items like doors, piping, and appliances out of spite or to make some quick cash.


A foreclosed home could also be in a poor condition depending on the previous owner’s relationship with the bank and the time that the house has been left unoccupied. These problems could potentially lead to maintenance issues that could become costly for you as a purchaser.

Cleanliness can be a big issue in a foreclosed home. If the house is left unopen and locked up for too long it can start to smell because of built up dirt. The home could also become quite dirty because of a long time spent without being cleaned or potentially neglect to clean the home by the previous owner.

Incomplete or improper renovations could also spell trouble for you as a buyer. The previous owners may have fallen on hard times financially leading to the foreclosure, and only half-completed certain projects around the house. This means you might have to invest your own money to get the job done if the half-finished work is causing issues. It is also possible that the prior owners did the work without professional help, and certain renovations they made may not be up to standard, causing you to spend even more money hiring professionals to make sure everything in the house is working right.

Purchasing Issues

When it comes to actually purchasing the property there can be additional issues concerning foreclosed houses beyond the state of the house itself.

You might not be able to receive a loan if your lender deems the foreclosed home uninhabitable or if the appraisal value of the home is far enough below asking price. It is also possible you may discover significant problems with the home upon inspection that bank was previously unaware of since none of them have ever lived in the house.

Even if you are not facing any of these problems you may still have to deal with competition from other buyers who are trying to get the same great deal you want by buying a foreclosed home for cheap and renovating it to increase its value.