Foreclosed Homes for Sale: Why They're Not the Deals You Think (What to Buy Instead)

Foreclosed Homes for Sale: Why They're Not the Deals You Think (What to Buy Instead)

Foreclosed Homes for Sale: Why They're Not the Deals You Think (What to Buy Instead)

When investors start looking for fixer uppers, one of the first things they hear is: "Look for foreclosed homes for sale! That's where all the deals are!"

After 8 years of flipping houses and closing 150+ properties, here's my truth: I've never bought a single foreclosed home. Not one.

That's not because I haven't tried. I've analyzed hundreds of foreclosed homes for sale, submitted offers on REO properties, and worked with sellers in pre-foreclosure.

None of them closed.

This article explains why foreclosed homes for sale rarely work for most investors, what the real problems are, and what you should focus on instead if you want to actually build a profitable flipping business.

What Are Foreclosed Homes for Sale?

Before we dig into why they don't work, let's clarify what "foreclosed homes for sale" actually means. The term covers three distinct categories:

REO Properties (Real Estate Owned). After a foreclosure auction fails to produce a buyer, the bank takes ownership. These foreclosed homes for sale appear on the MLS just like any other listing—except they're owned by banks instead of individuals.

Pre-Foreclosures. Homes where the owner is behind on payments and facing foreclosure, but the auction hasn't happened yet. These sellers sometimes try to sell before losing the property at the courthouse steps.

Courthouse Auction Properties. Homes sold at public foreclosure auctions, typically requiring all-cash purchases the same day with no inspection period.

Each category has problems. Let me break them down based on 8 years of real experience.

Why REO Foreclosed Homes for Sale Waste Your Time

REO properties are the most common type of foreclosed homes for sale on the MLS. Here's why they're frustrating:

Banks overprice and refuse to budge. A house realistically worth $100k gets listed at $200k. The bank waits. Months go by. They drop the price $5k. Wait another month. Drop it another $5k. This goes on forever.

You can't negotiate like a normal transaction. With a motivated seller, you submit an offer, get feedback, adjust, and work toward a deal. With banks? You submit an offer and hear nothing. No counter. No rejection. Just silence.

Banks move at a glacial pace. Even when they do respond, the timeline is absurd. Weeks turn into months. Meanwhile, how many off-market deals could you have closed?

You submit offers through terrible online portals. Forget calling the listing agent to discuss the offer. Banks require you to submit through their proprietary websites. These portals are buggy, confusing, and give zero feedback on your submission.

You can't get feedback to adjust your offer. If you offer too low, a normal seller tells you what they need. With banks, you just get ignored. You have no idea if you're close or miles apart.

I've submitted offers on foreclosed homes for sale through these bank portals dozens of times. The response rate? Maybe 10%. And when they do respond, it's usually a counteroffer at 95% of list price—which doesn't work for a flip.

The Pre-Foreclosure Problem: Sellers Wait Too Long

Pre-foreclosure properties sound better in theory. You're dealing with a person instead of a bank. You can negotiate. You can close fast if needed.

Here's the reality:

Sellers stall until it's too late. They get foreclosure notices and pretend they'll figure something out. They ignore the problem for 60, 70, 80 days. Then, 7 days before the auction, they panic and call you.

At that point, there's no time. You can't get financing approved. You can't complete due diligence. You can't coordinate closing.

Getting banks to postpone the auction is a nightmare. You can sometimes get the foreclosure sale postponed if you have a signed contract, but it depends on the bank. Small local banks might work with you. Big banks like Bank of America? You won't even get a response before the auction happens.

Probate makes it worse. I bought a house in Snellville on Excelsior last year that was in pre-foreclosure. The listing agent didn't even know the house was being foreclosed on because her client hadn't told her.

Then we found out the property had to go through probate.

Probate is slow. Foreclosure auctions are fast. Those two things don't mix.

We only closed that deal because our closing attorney pulled strings to expedite the probate process. We closed a few days before the scheduled foreclosure sale.

It was stressful, complicated, and required expertise most agents and wholesalers don't have. Our investor who bought it from us didn't have to deal with any of that—we handled it all.

But that's the exception, not the rule. Most pre-foreclosure deals fall apart because sellers wait too long.

Courthouse Auctions: Competing Against Institutions

Courthouse foreclosure auctions are where properties get sold to the highest bidder on the courthouse steps.

Sounds exciting, right? Show up with cash, outbid everyone, and walk away with a killer deal?

Here's what actually happens:

You need all-cash, same-day. Most auctions require cashier's checks and full payment immediately. If you're using hard money financing, it won't work. You need liquid cash ready to deploy.

You're competing with institutional buyers. Investment firms show up with $10 million+ to deploy across multiple properties. They're happy with 5% annual returns. You need 20%+ returns to justify your time and risk.

They'll outbid you every time. When someone can deploy $10 million and accept lower returns, you can't compete. They'll pay more than you can afford.

No inspections. You buy sight unseen. No contractor walkthrough. No understanding of what's behind the walls. You're gambling.

Title issues are common. Foreclosed homes for sale at auction can come with liens, unpaid taxes, or clouded titles. You inherit those problems.

Unless you're an institutional buyer with massive capital, courthouse auctions are a losing game.

Why Everyone Recommends Foreclosed Homes for Sale (Even Though They Don't Work)

If foreclosed homes for sale are such a bad deal source, why does every guru, course, and YouTube video recommend them?

Two reasons:

It's sexy. "I buy foreclosed homes!" sounds sophisticated. It implies insider knowledge. It makes for compelling course content.

It worked in 2008. During the Great Recession, foreclosures genuinely were the best deal source. Banks owned massive inventory and sold properties at fire-sale prices to clear their books.

That's not today's market. But the advice persists because people keep recycling strategies from 15 years ago.

Here's the reality: the housing market in 2025 is nothing like 2008. Banks don't own massive inventory. They're not desperate to sell. Prices aren't at rock-bottom.

The foreclosed homes for sale you find on the MLS today are listed at or near market value. The deep discounts everyone talks about? They don't exist.

What I've Learned After 8 Years and Zero Foreclosure Purchases

I've been flipping houses since 2017. I've closed over 150 properties. I've underwritten more than 10,000 deals.

In all that time, I've never successfully bought a foreclosed home for sale.

Not because the properties were bad. Because the process doesn't work for small-to-mid-size investors who need to move quickly and generate strong returns.

Here's what I focus on instead:

Off-market agent relationships. 70-80% of our deals at The von Group come from agents. Not random agents—agents we've built relationships with over months and years through consistent outreach.

Vetted wholesalers. About 10% of our deals come from wholesalers. But we sort through hundreds of wholesale deals to find the one that actually has solid numbers.

MLS properties that sit too long. Another 10% come from the MLS—properties that have been on market 60+ days and sellers are finally motivated enough to accept realistic offers.

Notice what's missing? Foreclosed homes for sale.

The Real Numbers Behind Our Deal Flow

Let me give you context on what it actually takes to find profitable deals consistently:

We reach out to 2,500 agents per day. Our team of 5 full-time acquisition specialists spends 40-50 hours per week each building relationships with agents who might have off-market properties.

We underwrite 30-40 houses per day. After 8 years and 10,000+ underwriting experiences, I can analyze a deal in 15-20 minutes. When you're starting out, a single underwrite takes 60+ minutes.

We make offers on 30+ properties per week. Even with all that volume, we buy maybe 1 out of every 100 leads that come in.

I personally work 65-80 hours per week on acquisitions—training the team, listening to calls, walking properties, negotiating offers, and managing deals under contract.

That's what it takes to generate consistent deal flow in 2025. It's not sexy. It's not a shortcut. It's volume and relationships.

Can you do that yourself? Maybe. But it requires full-time commitment and a team.

Or you can work with someone who's already built that system.

Why Searching for Foreclosed Homes for Sale Is a Time Trap

Let's do the math on what chasing foreclosed homes for sale actually costs you:

Time waiting for bank responses. You submit an offer on an REO property. You wait 2 weeks. No response. You follow up. Wait another week. They counter at 95% of list price, which doesn't work. You've now wasted 3 weeks on one property that went nowhere.

Opportunity cost. While you were focused on that foreclosure, how many off-market deals passed you by? How many agent relationships could you have built?

Frustration and burnout. Submitting offers into a black hole with zero feedback is demoralizing. It kills momentum and makes you question whether real estate investing even works.

Inconsistent pipeline. If you're relying on foreclosed homes for sale as your primary deal source, you don't have a business. You have a hope-and-pray strategy.

Compare that to what we do at The von Group:

Speed. You see a deal we send you. You run your numbers. If it works, you sign the contract and submit earnest money. Done. No waiting.

Transparency. We provide complete profit breakdowns showing ARV, all costs, and estimated net profit.

First-come, first-served pricing. No bidding wars. No negotiations. The price is the price. If you want it and the numbers work, it's yours.

Vetted deals. We've already sorted through hundreds of properties to find the one with real profit potential. You're not wasting time analyzing garbage.

Real Example: Why Experience Beats Foreclosed Homes for Sale

Let me show you why working with experienced investors beats chasing foreclosed homes for sale.

Last year, we had a house under contract at 5759 Albans Way in Lithonia. We estimated it could sell for $325k with the right renovation and marketing.

We offered it to our investor network first. None of them wanted it. They all thought:

• It would sell for under $300k

• Renovation would cost $100k

So we bought it ourselves.

Our actual renovation cost: $58k (not the $100k everyone estimated).

The house turned out beautiful. When we listed it, there were 18 active competing listings in the neighborhood—usually a terrible sign for resale.

But we put our marketing strategy to the test.

Within 2 weeks: 4 offers

Accepted offer: $354k

The appraisal came back at $345k. We negotiated with the buyer to waive their appraisal contingency by addressing some inspection items they wanted fixed. They covered the $9k difference.

Final sale price: $354k

That's $29k over appraisal and $54k higher than what our experienced investors thought it would sell for.

That's the difference between someone who actually flips houses and understands local markets versus someone just running numbers on a spreadsheet.

You won't find that kind of expertise chasing foreclosed homes for sale on the MLS. You find it by working with people who do this every single day.

What to Do Instead of Searching for Foreclosed Homes for Sale

If foreclosed homes for sale don't work, what does?

You have two options:

Option 1: Build the volume machine yourself.

This means:

• Reaching out to thousands of agents per month

• Underwriting dozens of properties per day

• Making offers on 20-30+ properties per week

• Building relationships consistently for months before seeing results

This is what we do at The von Group. It works. But it requires a full-time team and massive time investment.

Option 2: Partner with someone who's already built the machine.

This is where The von Group comes in. We do the volume for you. We sort through the garbage. We only send deals with real profit margins.

When we send you a property, it's already been:

• Underwritten by someone with 8 years of flipping experience

• Analyzed for accurate ARV based on neighborhood-specific knowledge

• Vetted for realistic rehab costs

• Confirmed to have solid profit potential

You focus on closing deals and managing renovations. We focus on finding the properties.

The Alex Hormozi Lesson: Volume Wins

Here's a lesson that changed my business.

When I started doing agent outreach, I thought 30-40 calls per day was enough. After 3 months of me and one employee making 30-40 calls daily, we weren't buying enough houses.

We increased to 200 calls per day between two people.

Our deal flow skyrocketed.

This aligns with what Alex Hormozi (Acquisition.com) teaches: "Do More."

You think you're doing a lot. Then you talk to someone successful and realize they're doing 10x what you're doing.

Now we reach 2,500 agents per day. That's what it takes in 2025's saturated market.

Most investors can't do that. And that's okay—you don't have to if you work with someone who already does.

When Foreclosed Homes for Sale Might Work (Rarely)

Are there situations where foreclosed homes for sale make sense?

Yes, but they're narrow:

You're an institutional buyer with $10 million+ to deploy. You can buy in bulk at courthouse auctions, accept lower returns, and absorb risks that individual investors can't.

You have all cash and can close in 3-5 days. Some pre-foreclosures work if you can move extremely fast and the seller reaches out early enough (which rarely happens).

You have deep bank relationships. If you're buying 50+ REO properties per year, banks might start prioritizing your offers. For investors buying 2-5 deals annually? Not happening.

You have expertise in probate and foreclosure law. Like the Snellville deal I mentioned—most investors would've lost that property. We saved it because we had the right closing attorney and experience.

For 99% of investors, foreclosed homes for sale are more trouble than they're worth.

What Actually Works in 2025

After 150+ deals, here's what consistently produces results:

Off-market agent relationships. Build genuine relationships with agents who specialize in distressed properties. This takes months of consistent outreach but produces the best deals. Working with an agent to find off-market deals explains how.

Quality wholesalers. Work with wholesalers who are actual investors themselves (not just deal passers). They understand what makes a good flip. Wholesale real estate deals covers how to vet them.

Strategic MLS searches. Look for properties sitting 60+ days with motivated sellers. How to find fixer upper homes details the MLS strategies that work.

Partnership with experienced investment brokerages. Work with companies like The von Group that do the volume for you and only send vetted deals.

The common thread? Relationships and volume. You either build them yourself or work with someone who already has them.

Why The von Group Beats Foreclosed Homes for Sale

When you work with The von Group instead of chasing foreclosed homes for sale, here's what you get:

Pre-vetted deals. We've already analyzed hundreds of properties to find the one with solid profit margins.

Experience-based underwriting. Our analysis comes from someone who's flipped 150+ houses and underwritten 10,000+ deals—not a wholesaler who's never done a renovation.

Neighborhood expertise. We know Atlanta markets intimately. We know that a comp 0.2 miles away might sell for $200k more just because of the street it's on.

Transparent pricing. First-come, first-served. No bidding wars. If the numbers work for you, the deal is yours.

Title contingency protection. Our closing attorney handles title issues. If something can't be resolved, you get your earnest money back.

The $20,000 profit guarantee. If your flip profit falls below $20,000, we'll list the resale for just $1,000 + 0.12% commission instead of standard 2.5-3%.

Real investor experience. We flip houses ourselves. We're not just passing deals—we're active investors who know what works.

The Bottom Line on Foreclosed Homes for Sale

Foreclosed homes for sale sound like a shortcut to great deals. In reality, they're:

• Slow (months waiting for bank responses on REO properties)

• Competitive (institutional buyers with deeper pockets at auctions)

• Frustrating (zero feedback on offers)

• Risky (no inspections, potential title issues)

• Inconsistent (pre-foreclosures fall apart at the last minute)

You can waste months analyzing foreclosed homes for sale and never close a deal.

Or you can focus on what actually works: relationships, volume, and partnerships with experienced investors.

The choice is yours. But if you want to build a real business instead of chasing pipe dreams, stop searching for foreclosed homes for sale and start building deal flow that actually produces results.

Ready to Stop Wasting Time on Foreclosed Homes for Sale?

The von Group provides vetted off-market properties with transparent pricing and proven profit margins. Our founders have closed 150+ deals since 2017 by doing the volume most investors can't—so you don't have to.

We sort through hundreds of properties weekly. When we send you a deal, the numbers work.

Get access to vetted investment properties here.

Need financing? Check our financing resources to connect with hard money lenders who close quickly.