There are more ethical dilemmas in real estate than the issue of buying foreclosure properties, but it might well be one of the most controversial. Is it right to buy a property which was a home to a family before they were kicked out buy the mortgagee? Sure the property might come at a good price, but does that mean you should buy it?
One of the key things about real estate that a lot of people lose sight of is that while it is a business, there is a real human side to it. People often get emotional about their properties, which are often their homes. While this is not encouraged among real estate investors, not all people who own properties are investors. Owner occupiers can get away with having emotional connections to their property, but investors must keep a cool head and keep their emotions on the back-burner.
Buying Foreclosure Properties: the pros
I’m not going to advocate not buying foreclosure properties. In fact I think that going down this road is a very good way for people to get into the real estate market, and usually at a good price too. Often, lenders who have repossessed a property are keen to make the money back that they are owed, and don’t care too much beyond that. This means that there is plenty of opportunity for quick and astute buyers to profit from cheap foreclosed properties.
Be careful of people spruiking next to nothing purchases and insane prices though – there are plenty of real estate seminars and so-called guaranteed profit speakers out there. The reality is that there is no such this as a sure thing – which leads us to the cons of buying foreclosure properties.
Buying Foreclosure Properties: the cons
Right up there among the few cons of buying a property which has been foreclosed is the sense of taking advantage of another’s misfortune. If you are a real estate investor then this is something that you can comfortably ignore. The reason being that buying an investment property is a business decision only – that’s it. What was once a family home is now a part of your investment portfolio – that’s the market for you.
If, on the other hand, you are looking to buy a property to live in yourself, then I would not recommend buying a foreclosure property. I myself would find that close association with previous strain and stress too much of a negative factor when looking to make the house a home. But that’s just me. Others may not feel that way and may enjoy transforming the home into their own, and giving it a new, positive lease on life.
Buying a foreclosure property is a simple process, once you have decided that it is something that you want to do – it’s making that ethical decision that is sometimes difficult. Occasionally these ethical dilemmas come up in the business of real estate investment, and that’s fine – that’s business. What we should make sure of is that we conduct ourselves professionally and hold true to our moral compass.
It’s not true that you are profiting from someone else’s misfortune by buying a foreclosure property – it’s likely that you are making an investment decision which is uninfluenced by emotion, and that’s fine.