Bankruptcy homes or foreclosed homes are those houses or real estate that moneylenders confiscate and put up for sale, owing to their respective borrowers' failure in paying back their mortgage or home loan installments. Though, bankruptcy is never a pleasant affair for a homeowner, yet it has the advantages of yielding an honest borrower the chance of a fresh start, while offering a good bargain to the foreclosure buyer too.

• Discounted rates. The major advantage of buying a home after bankruptcy or a foreclosed home is that it is priced much below the prevailing market rates. The reason for this being that the moneylender, be it a bank or any other financial institution, would want to recover its outstanding due the soonest possible. In addition, the lender will not want to waste any more resources on maintaining bankruptcy homes for sale in a saleable condition. This translates into low cost price for the buyers.
• Profitable investment. A low cost purchase of a foreclosed property translates into a handsome profit margin for the buyer, who buys the house from an investment point of view. These bankruptcy homes fetch a tidy amount when put up for sale after a bit of sprucing up and minor repairs.
• Incentives. The lenders may offer attractive payment options to the buyers, so that the property is disposed off as quickly as possible.

The advantage foreclosure sales offer to the sellers is that it rids them of a liability and affords them to start afresh with a clean slate, though they might be selling that property at a slight loss. Disposing off a defaulted piece of real estate helps the sellers generate a good amount of capital. This often helps them tide over difficult times, while also allowing them to correct their fiscal health in other spheres of their lives.

As with any investment, it pays to do one's homework in buying/selling of bankruptcy homes. It would be in the buyer's interest to have a thorough knowledge of the paper work involved, while complying with all the applicable legalities pertaining to the foreclosure sales of the US state you plan to buy property in.