Foreclosed homes give buyers another path to savings
Foreclosed homes sold for a median 27.2% below their estimated value, giving cost-conscious buyers another option as listings reached a six-year high, Realtor.com reported. Economists said the increase reflects a return to more normal market conditions, not a housing crisis.
Buyers looking for a discount may want to take a closer look at foreclosed homes.
According to a new Realtor.com report on the state of the foreclosure market, the median foreclosed home sold for 27.2% below its estimated value, as foreclosure listings climbed to their highest level in six years.
Foreclosure listings made up 1.3% of all homes for sale in April 2026, up from a recent low and approaching the 1.7% share seen in April 2020. The report also finds that foreclosure listings are drawing more attention than the average listing, getting 26.5% more page views in the first half of 2026, even as they sit on the market an average of 11 days longer.
"Foreclosures are normalizing, not accelerating into a crisis," said Joel Berner, senior economist at Realtor.com. "This rise is happening because pandemic-era forbearance and moratorium programs fully wound down in 2024, and the homeowners feeling it most are the ones who bought at peak prices and are now squeezed by rising insurance, taxes and adjustable-rate payments.
"Even with that pressure, we're looking at a return to 2019 norms, not anything close to the Great Financial Crisis."
When a foreclosed home fails to sell at auction, it becomes real estate owned (REO) property, often listed on an MLS by the lender, who prices it to sell quickly.
The median REO discount has ranged from roughly 20% to 35% since 2018. The high end of that range was reached in 2022 and 2023, when the frenzy of pandemic-era buying inflated automated home valuations and made the discount look larger than it was. As price growth has flattened in 2025 and 2026, the discount has settled back to a more typical 27.2%.
The metros carrying the highest share of foreclosure listings tend to be more affordable ones, where buyers entered homeownership with thinner margins.
REO listings attract plenty of attention, but still generally take longer to sell. The slower pace reflects the product: REO listings had 30.4% fewer photos and descriptions 33% shorter than those of standard listings.
Most sell as-is, meaning buyers absorb any needed repairs. Buyers can inspect the interior and use conventional financing, but the condition and limited marketing materials mean many take longer to commit — or they decide to walk away because of the higher level of uncertainty.
"In a market where affordability is still the dominant challenge, foreclosures offer a path to a meaningful discount," Berner said. "The process takes patience, but for buyers who are prepared and can navigate the challenges of buying this type of home, the savings are real."
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