How does someone make money off a foreclosure? Doesn't that mean you take over the payments?

Question

how do you benefit

Answer 1

After the house is foreclosed the bank takes posession of it, then auctions it to try to get some of their money back.  You buy the house off the bank dirt cheap and then sell it for a profit when market prices improve (or immediately if you can get it really cheap).

I've heard stories about people buying houses for as little as $20.  Of course, usually foreclosed homes have all sorts of neglect associated with them, and a lot of repairs that need done before it's in sellable condition, but yeah..., that's the theory.

Answer 2

When you buy a foreclosed house you don't pay the market price.  The bank wants to unload the home and get their money back.  Which means that you can get the house for the outstanding loan and expenses.

Sometimes the houses are rundown.  But some banks will do basic fix ups to make them more appealing.  Also, if they don't sell in a reasonable time, the bank will lower the price.

My home was a foreclosure when I bought it.  It was in a desirable neighborhood and in good condition.  And I got it for much less than any other home in the area.   I could have sold it for a profit.  But I wanted to live in it.

Answer 3

No, it does not.  It means the lender takes the property from the defaulted owner and sells it on the market.