What is a distressed property? Well, we aren’t speaking in terms of hardwood floors. A distressed home is one whose owner has defaulted on the mortgage. Banks will repossess the property and then try to resell it through auction or to the general public in order to recoup any financial losses. Normally a distressed property sells for much lower than its market value.
Now if you’re looking to purchase a home soon, a distressed property is definitely worth looking into – especially if you want a good deal on a home. However, keep in mind that buying a distressed property can be a hassle for more reasons than one.
Most of the time, the home isn’t in the best shape. Now this isn’t always the case but they are usually sold as-is which can mean a lot of repairs if there is extensive damage to the home. So after you’ve picked out a couple home you are seriously considering, it’s more than beneficial to get estimates on the home, so you know what additional costs you are looking at.
If looking to get financed, get pre-approved from your lender first. You will have plenty of investors to compete with who often pay cash. With that being said, the bank needs to be able to take your finance offer seriously in order to consider it over an investor’s cash offer. Applying for a preapproval will allow you to know what your bank will lend you beforehand, enabling you to make an offer for a property on the spot if necessary.
If new to the process, it’s definitely a good idea to hire a realtor. An agent will be most familiar with the area you’re looking to buy in.