Posted on August 25, 2011 by Baker, Wayne and Associates
Everyone wants to get a good deal on a home that they are considering purchasing. Please do your homework first. Get with a buyers representative to help you navigate the process. These are some of the steps that will help you in your quest to buy a distressed property.
Don’t Get Blindsided When Buying A Distressed Property
If you’re getting ready to buy a home to live in or a vacation home to visit or an investment property to rent out, you’re probably interested in exploring the distressed properties available in today’s market. Why not scoop up a bargain, right?
There’s just one problem: Some distressed properties aren’t bargains at all — not even close. They may not be in an ideal location. They may need major repairs or improvements. Others will have too few of today’s sought-after amenities, or be in a poor school system, or be surrounded by dozens of other distressed properties. And those are only some of the possible pitfalls.
Still, there are some real gems out there. Your challenge is to find that distressed diamond in the rough — either pre-foreclosure or post-foreclosure — that’s worth your long-term investment of cash and monthly payments. Here are some market-smart secrets to set you on the right path to a worthwhile distressed-property purchase.
Contract with a buyer’s agent. This is a real-estate pro who will look after your interests, not the seller’s. An agent experienced in working with the institutions selling distressed properties — banks, government agencies, etc. — can help you identify homes suitable to your needs and goals. Even more, your agent will guide you through the negotiation process so you emerge with a great price on a valuable property.
Get pre-approved for a mortgage. We’ll work with you to get loan pre-approval so you can move fast when you find a distressed property worth buying. Being pre-approved for a mortgage puts you in the same league as “cash buyer” competitors that are also bidding on the best bargains.
Visit candidate properties in person. It’s amazing how much different a property can look in person compared with photos posted online. The only way to get a true feel for a property and its location is to see it with your own eyes.
Hire a certified professional home inspector to thoroughly check out a property before you even begin negotiations with the seller. This will cost you several hundred dollars up-front, but the payoff could be huge:
- Saving you from buying a home that has problems you neither have the money nor inclination to fix.
- Identifying needed repairs you are willing to undertake so you can factor those costs into your offer to the seller. Ask several contractors for estimates of materials and labor needed to remedy any problems your inspector finds.
Focus on the numbers. The seller may not lower the price of the property enough to cover the expenses you’ll incur to make needed repairs and desired upgrades. Will you have the time, money, skills and/or contractor connections to accomplish those tasks after you purchase the home? If the answer is “no,” be prepared to keep looking.
Check for fit. Remember, a distressed home can only be a great deal when it meets your needs, wants and goals. Just because a property is inexpensive and in good shape, doesn’t mean you’ll be satisfied with it long term.
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