Is buying a foreclosure a good idea? In the first half of 2026, buyers who purchased foreclosed homes for sale saved roughly 27% compared to market value, according to Realtor.com. Foreclosure listings — also called REO properties, short for "Real Estate Owned" — made up 1.3% of all homes for sale in April, the highest share in six years.

They're getting more attention too: REO listings pulled in 26.5% more page views than typical listings. But they sit on the market about 11 days longer on average, and it's not just because "foreclosure" sounds scary.

Is buying a foreclosure a good idea? It can be, if you're comfortable with more due diligence and possible repair costs in exchange for a lower purchase price and less competition. It's usually a weaker fit if you want a move-in-ready home with minimal surprises. The right answer depends on your budget, risk tolerance, and how much time you can put into research before making an offer.

If you're house-hunting in DC, Maryland, or Virginia, here's what's driving the increase in foreclosures, what you gain and give up with an REO purchase, and how to tell if one's worth pursuing.

Why Are Foreclosures Increasing in 2026?

Foreclosure activity is rising, but it's still well below the 1.7% peak seen in 2020 and nowhere close to Great Financial Crisis levels.

Most of the increase traces back to pandemic-era forbearance and moratorium programs that fully wound down in 2024. Homeowners who bought at peak prices got squeezed from multiple directions — rising insurance premiums, higher property taxes, and adjustable-rate mortgages resetting to much higher payments. For many owners, the cost of keeping the home grew faster than their income could keep pace with.

Realtor.com senior economist Joel Berner has described this as the market normalizing, not a sign of another mortgage crisis.

What Is an REO Property?

An REO (Real Estate Owned) property is a home that failed to sell at foreclosure auction, so ownership reverted to the lender. When it hits the market as a foreclosure listing, it's typically priced below market value to sell quickly — which is the source of the foreclosure discount buyers are chasing.

Despite the lower price, REO homes sit an average of 11 days longer on the market nationally. Three reasons why:

• REO listings average 30.4% fewer photos than standard listings.
• Listing descriptions run about 33% shorter than typical listings.
• Many REOs sell strictly as-is, with the buyer absorbing all repair costs.

You're not going in blind, though. You can still get a full inspection, tour the property, and work with an agent who researches its history — flooding, septic issues, pest problems, prior damage — before you commit. Conventional financing is also still available for most REO purchases, despite a common myth that foreclosures require cash.

Should You Buy a Foreclosure in DC, Maryland, or Virginia?

It depends on what you're optimizing for.

If you want a move-in-ready home with minimal surprises, a traditional resale or new construction is usually the better fit. Foreclosures ask more of you: more patience, more due diligence, and often more money after closing.

If you're comfortable taking on a project, or you're trying to stretch your budget as far as possible, a foreclosure can be a real opportunity to buy more home, or a better location, for less than comparable listings nearby.

Potential advantages of buying a foreclosure:

• Purchase price below comparable homes
• Less buyer competition, since many people skip foreclosures without a closer look
• Ability to build equity through repairs and updates
• Conventional financing is often still available

Potential drawbacks of buying a foreclosure:

• Sold as-is, typically with no seller repairs
• Deferred maintenance can hide costly issues
• Utilities and systems may have sat unused and need work before move-in
• Limited listing information means more homework on your end

The real question isn't whether the foreclosure discount is real — it usually is. It's whether that discount still holds up once you factor in what it costs to bring the home up to standard. That's where having an agent run the numbers with you, not just show you the listing, makes the difference.

FAQ: Buying a Foreclosed Home

Is buying a foreclosure a good idea?
It depends on your priorities. Foreclosures can offer a lower purchase price and less competition, but they typically come with more repair risk and less listing information than standard resale homes.

What is the average foreclosure discount?
As of the first half of 2026, buyers saved roughly 27% on foreclosed homes compared to market value, according to Realtor.com data.

Can you get a mortgage on a foreclosed home?
Yes. Conventional financing is available for most REO properties, though the home generally needs to meet the lender's minimum condition standards to qualify.

What's the difference between a foreclosure and an REO property?
A foreclosure is a home being sold due to the owner's default. If it doesn't sell at auction, the lender takes ownership and it becomes an REO ("Real Estate Owned") property, which is then listed for sale by the bank.

Why do foreclosed homes take longer to sell?
REO listings average 30.4% fewer photos and 33% shorter descriptions than standard listings, and many sell as-is, which slows buyer decision-making even at a discounted price.

Thinking about buying — foreclosure or otherwise — in DC, Maryland, or Virginia? Edward Slavis and the team can help you evaluate whether a specific property is a real deal or a costly surprise waiting to happen.

Already own a home and weighing whether to sell first? Ask about the Guaranteed Sale Program — your home sold, guaranteed, or we buy it.