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The Foreclosure Home Discount is at 27%

 In the first half of 2026, buyers saved about 27% on foreclosed homes listed for sale. 

And as of April, foreclosure listings made up 1.3% of total for-sale listings, the highest level in six years. 

New data from Realtor.com also shows foreclosed property listings, also called REO listings, are getting 26.5% more page views compared to typical home listings. 

Yet they still sit 11 days longer, partly because foreclosure has a scary reputation for a lot of homebuyers. But that’s not the only reason. 

While these properties could be hidden opportunities, they’re not without risk. 

Here’s what’s driving the rise in foreclosures and the trade-offs that go with buying an REO property vs a seller-owned or newly-built home.

By the time you’re done reading this, you’ll know what to expect in Connecticut and whether these homes are worth looking into. 


Why Foreclosures Are Ticking Up Again

Foreclosure listings reached their highest level in April, hitting 1.3%. It’s still shy of the recent high of 1.7% from 2020, and it’s nowhere near the levels seen during the Great Financial Crisis. 

The increase in foreclosures has a lot to do with forbearance and moratorium programs from the pandemic era that fully wound down in 2024. Owners who bought at peak prices were then squeezed by rising insurance costs, rising property taxes, and resetting payments for adjustable rate mortgage (ARM) loans. 

In short, the cost of keeping their home grew significantly faster than their household income could make up for it. 

But as Realtor.com senior economist Joel Berner explained it, that increase is the market normalizing, not a sign of another mortgage crisis. 

That said, there are some things you need to know about buying an REO property. 

What You Actually Get, and Give Up, With a Foreclosure

First things first: “What’s an REO?” 

When a foreclosed property fails to sell at auction, it becomes a “Real Estate Owned” (REO) property, which is when a lender repossesses a home. When it is put on the market as a foreclosure listing, it’s often priced below market value in order to sell as quickly as possible.

Instead, these homes would sit an average of 11 days longer on the market (nationwide). 

Here’s why: 

  • REOs have 30.4% fewer photos than standard listings

  • Descriptions for REO homes are 33% shorter than for standard listings

  • Many REOs sell as is (the buyer absorbs repairs)

As a buyer, though, you can still get interior inspections. You can still tour the home. You can still work with a real estate agent who can look into the property’s history (flooding, septic issues, bug/rodent/snake infestations, property damage, etc.) and help you avoid an expensive mistake.  

Also, to answer another common question, conventional financing is still an option. 

So, is this something you should look into?

Should You Consider Buying a Foreclosure?

The answer depends on your priorities.

If you're looking for a move-in-ready home with fewer surprises, a traditional resale or new construction home may be a better fit. Foreclosures often require more patience, more due diligence, and sometimes additional money after closing for repairs and updates.

On the other hand, if you're comfortable taking on a project—or you're simply looking to maximize your budget—a foreclosure could be an opportunity to buy a home for less than comparable properties in the area.

Before making an offer, here are a few things to look for:

Potential advantages

  • Lower purchase price than similar homes

  • Less competition in some markets because many buyers overlook foreclosures

  • Opportunity to build equity through repairs and improvements

  • Conventional financing may still be available on many REO properties

Potential drawbacks

  • Homes are typically sold as is, with limited or no seller repairs

  • Deferred maintenance or hidden issues can increase renovation costs

  • Utility systems may have been unused for extended periods and need repairs

  • Limited property information may mean you'll need to do more research

The key is working with an agent who can help you evaluate whether a lower purchase price actually outweighs the cost of repairs and future maintenance. A discounted home isn't necessarily a good deal if it comes with expensive surprises.

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