Buying a property is a challenging task and requires a lot of patience and understanding of the diverse paperwork that goes into it. Whether you are buying a house for staying or for investment purposes the process remains the same. For those who consider buying properties as an investment, every available property for sale gains their attention. Whether it is a real estate deal or a distressed property, nothing misses their radar. However, when investing your hard-earned money in a distressed property certain points need to be kept in mind.
Before moving on to the tips that will help you in a smooth buying process, let’s first understand what is a distressed property. A property whose owner is in default on the mortgage is called a distressed property. These properties are listed at comparatively lesser prices as the bank wants these properties off the liability column of their records. However, investing in a distressed home is not an easy call as they will be sold in the condition they are in and many times they require extensive repair and renovation to use them.
If you are interested in buying a distressed home, you can look up the following places for a deal. A distressed home can be found listed in Bank auction listings, Real Estate listings, Probate court when the home is up for Probate Sale or tax records. It’s time you check out some tips that can guide you to the buying of a property that is declared distressed.
- Make sure you are pre-approved for a mortgage before you approach or show interest in buying such properties. If you are an individual trying to buy a home then be ready as you are up for some serious competition from investors. Being pre-approved for a mortgage you pose yourself as a reliable buyer to the banks selling the property.
- A distressed home may come with many pitfalls, so taking the help of a professional real estate agent who can represent you and handle the issues is recommended. Look for an agent who has significant experience in dealing with such foreclosures and can guide you knowledgeably.
- A professional home inspection is recommended for any home you purchase. However, in the case of a distressed home, it becomes all the more important. Since, in case of foreclosures and short sales the property is sold as it is, a thorough inspection can help you understand the condition and the situation of the property and help you calculate the costs that you need to bear for the renovations or repair work.
- It is often found that in case of foreclosures, the homeowners are forced to leave their abode while banks list the property to recover the loan amount, in such scenarios, the homeowners leave behind intentional damages. As the new owner, you will be entitled to the repairs to make the property livable. So, it is recommended to be mentally prepared to face the situation and be ready to squeeze a significant amount into the repair work.
- It is recommended that you ask your lender to conduct an appraisal of the property so that you can use the appraisal value to place your purchasing price. It is often found that the distressed property is in pretty bad shape, while the bank refuses to offer any concessions based o the condition. And that is when you can use the appraisal value strategically to persuade the bank for a lower value to purchase.
Apart from these valuable tips that can be effective to help you in purchasing a distressed home, what remains important is your approach as a reliable buyer. A larger down payment often cites you as a better option for the lenders. It is advisable to offer 20 to 25% of the buying price as the down payment to present yourself as a genuine buyer. However, it is also important to pitch a serious offer to the lender. With the help of a professional agent, you can come up with an agreeable offer. Remember, these properties are a liability to the bank and they are willing to sell them off the fastest the best. Take a cue from the bank’s urgency and present a serious offer. Last but not the least, if you are buying a house to move into the same then remember to check on the neighbourhood. Getting a distressed home in a good neighbourhood is a great deal to make, so inspect the neighbourhood before offering a deal.
Purchasing a property is no child’s play as it undergoes a lot of documentation and valuation processes. When investing in a Probate Sale, make sure you are aware of the foreclosure laws of your country for a better assessment of the property and to make a smart investment. And most importantly, stay patient throughout the process as it will take time and you will be subjected to a lot of delays and frustrations before the deal materialises. All the best.