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A foreclosure is the action of taking possession of a mortgaged property when the mortgagor (borrower) does not make their mortgage payments.


Alaska foreclosures can be excellent deals for home buyers and investors. If you’re willing to do some work, there may be the possibility of gaining instant equity when buying a foreclosed property.  Most foreclosed properties are Real estate owned or REO.   The term REO is a term used to describe a property owned by a lender.  There are numerous lenders in Alaska real estate.  They can be a bank, government agency, or government loan insurer, like Fannie Mae (The Federal National Mortgage Association (FNMA)), Freddie Mac (Federal Home Loan Mortgage Company (FHLMC)) or the VA (Veterans Administration.  Generally, after an unsuccessful sale at a foreclosure auction, the property becomes an REO.


Not all foreclosures are good deals.


Before buying a foreclosure, there are a few factors to consider carefully.




Condition should always be a concern, especially, in Alaska, where pipes can freeze, mold can abundantly grow and freeze damage can alter structural integrity.


Some foreclosed Alaska homes are sold strictly “As Is”.  This means that the seller will not do any repairs.  Because of this condition, the property may not be financeable through a mortgage and require a “cash” purchase.


Some other foreclosures will allow health & safety repairs so the property may be financed through a mortgage.

Second is VALUE.


Often homebuyers and investors think that foreclosed properties will be priced below market.  This is counterintuitive. Common sense would lead all of us to believe this, but since about 2008, lenders have carefully kept pace with local markets and have typically attempted to keep foreclosure listings in pace with the retail market.


The key is patience and diligence.


Neighborhood comparables will determine the average price per square foot of recent homes sold in the area. When we estimate the resale value of the foreclosed properties to determine the true value of the deal, it is important to use a comparable market analysis. In some instances, the foreclosures are priced the same as recent owner occupant homes sold.  They are not actually good value comparisons. If you are interested in buying an Anchorage or Valley foreclosure, let us know and we can run a custom search through our proprietary database to find homes based on the profit spreads, resale value, and estimated days on the market.




Probably the single best and worst component in determining whether to purchase an Anchorage or Valley foreclosed property, is the seller is not emotional.  Sellers who have lived in a home for any period develop emotional attachments which in some cases can create conflicts with future sales transactions.  The sellers of foreclosed properties are usually administrators with a pile of files on their desks and one goal in mind – close the file!


So as a result, their objective is to use a local Alaska real estate professional to determine value which enables the administrator to move forward with marketing the property on the Alaska Multiple Listing Service (MLS).  Once it is listed, the clock starts to run.  Although there is no set formula for price reduction, it is not atypical to watch price reductions occur on a 30 day or so cycle.  Here is where, if you have the time, the best values can be appreciated, although, remember it is a competitive market with the advent of more and more individuals wanting to get a better deal through foreclosures.


The reason I call it “single best and worst component” is administrators generally have NO emotion.  An offer can come into them and if it makes sense they do it and if it doesn’t they don’t.  Generally though, every offer is countered, but keep in mind, I have seen very low offers on a foreclosed property countered by the administrator at just a few dollars below the list price which will often frustrate an inexperienced buyer.  The administrator’s objective is to get a return on the lender’s investment.