Is it cheaper to buy a repossessed house ?

Trudie, short answer first, because your question contains a very common assumption and correcting it saves you a lot of wasted effort: no, you cannot pay only the remaining loan balance. Once the bank has completed foreclosure and taken title, the old loan is gone. It was extinguished in the foreclosure. The bank now owns real estate, not a loan, and it prices that real estate at market value, the same as any other seller. The answers above are right that these are sold as is and that bargains exist. Nobody addressed the balance question, though, and it is the one you actually asked. The reason banks do not sell at the payoff amount is simple. Their loss is already booked, and their job is to sell the asset for what it is worth. If it sells for more than was owed, the surplus goes to junior lienholders and then to the former owner, not to you. Either way, the loan balance is not a price. Now the New Mexico part, because your state works differently from most and this is where buyers get hurt. New Mexico is a judicial foreclosure state. There is no quick trustee sale on the courthouse steps. The lender has to sue in district court, get a judgment, publish notice of sale in a newspaper for four weeks, and the sale is conducted by a court appointed special master. Then comes the piece almost nobody knows. Under NMSA 1978 Section 39-5-18, the former owner can redeem the property by filing a petition in the foreclosure case within nine months of the sale, meaning they can take it back from whoever bought it. Section 39-5-19 lets the parties shorten that period in the mortgage itself to not less than one month, and most residential lenders do exactly that. But the court can extend it back toward nine months before judgment, and the clock commonly runs from the order confirming the special master's report rather than the auction date. The practical consequence: if you buy at the special master's sale, you may own a house someone else can take back, and title insurers know it. That is why almost every ordinary buyer should wait. Let the bank take title, let the redemption period expire, let them clear the liens, then buy the REO listing on the MLS where you get a title policy and a normal closing. What to expect when you do buy an REO: - Sold as is, with no seller property disclosure. The bank never lived there and does not have to tell you anything. - It may still be occupied, by the former owner or a tenant, and removing them is your problem after closing. - Utilities are usually off. Schedule your inspection so power and water are turned on first, or your inspector cannot test the furnace, the plumbing, or the electrical panel. - Order a full title search and buy an owner's policy. Unpaid property taxes, code liens, HOA liens and mechanics liens survive if they were not properly extinguished. - Budget for deferred maintenance. Winterization failures and roof issues are the common expensive surprises. On price, treat any rule of thumb skeptically. New Mexico REO commonly transacts somewhat under market, but Gallup is a thin market with a typical home value near $181,000 and only about 32 sales in July 2026, so "market value" itself has a wide error bar there. Get a real comparative market analysis first. I am Zoltan Peresztegi, a real estate professional in Los Angeles and the South Bay, including the Palos Verdes Peninsula, and distressed sale mechanics change completely at the state line. Since you are in New Mexico, I would be glad to connect you with a strong Gallup area agent from my referral network who tracks the district court filings and the bank listings, and can steer you to the clean REO rather than the sale you should skip. Zoltan

I assume you are referring to a foreclosure property, and these days, a significant discount is rare on these given the limited inventory of the market. There are also additional complications like the often as-is component and often cash deals. Keith Jean-Pierre Managing Principal The Dapper Agents Operations In: NY, NJ, FL & CA

Bank-owned properties, also called REO homes, are sometimes priced below market value but you don't get to just pay the remaining mortgage balance. That's not how it works. When a bank repossesses a home through foreclosure, they own it outright. They set the asking price based on the property's current market value, not based on what the previous owner owed. If the home is worth $250K and the previous owner owed $180K, you're not buying it for $180K. You're buying it at or near market value. That said, banks are motivated sellers. They don't want to hold real estate. REO properties are often priced competitively to sell quickly, and there can be room to negotiate, especially if the home has been sitting on the market or needs work. Banks typically sell REO properties as-is, meaning they won't make repairs. That as-is condition is often where the discount comes from, not the loan balance. You can find bank-owned properties on sites like HUD Home Store for FHA foreclosures, HomePath for Fannie Mae properties, and HomeSteps for Freddie Mac properties. Your local MLS will also list REO properties. Work with an agent who has experience buying REOs because the process and paperwork are different from a standard purchase.

There are a lot of factors that go into a Repossession or a foreclosure process. It is not as simple as just buying it from the bank. There also are not as many of these on the market and many times the banks have become smart to do renovations to them to get the retail price from the asset. So I would recommend connecting with a LOCAL REALTOR to be able to answer the questions about this specifically for your local market and how the market is with these options. We have very few of these in our current market in the SC area. So see is an agent in the NM area can help answer this about your local market.

You can save money (sometimes) with a bank foreclosure. It can be a risky purchase also. Make sure you do adequate research prior to spending your hard earned cash on the pros and cons of buying a foreclosed property. You may save $$ or end up with someone big issues.

Hi Trudie. I would suggest talking with a local licensed REALTOR. Here in California, someone can buy a home that is at auction due to foreclosure or they can purchase it once the bank takes official ownership. I have many years of REO experience, in the past banks have hired local REALTORs to list the homes and sell them as if it was a traditional sale. Some banks will have formal appraisals done to determine the value or they will ask for a BPO (broker price opinion) to determine the value. More times than not, the home is sold nearish market value. There is always a chance for a "deal" though! Hope that helps!