There are a great many deals for buyers and investors. But making a sound purchase can be tricky. Buyers need to be wary of unpaid liens, including mortgage debt, property taxes, construction loans, home equity lines of credit, and possibly a second or third mortgage. Any or all of these financial obligations could become your responsibility when you purchase a property in foreclosure. Unless the property goes through a foreclosure auction and becomes a bank-owned REO, the outstanding foreclosure liens and fees could be simply transferred to the new owner.
A buyer looking for a good investment should generally avoid neighborhoods with many foreclosures, particularly newer subdivisions in overbuilt areas. Investors will be tempted to buy foreclosures in these areas because they offer the biggest discounts, but they also carry the most risk of further depreciation. Look in well established neighborhoods with good schools and transportation.