When in the market for a home, or looking to invest in real estate, distressed properties can be an appealing choice for lots of reasons. You can purchase a property below its market value and save money. Most of the time.
If you aren’t armed with some basic information before diving in, you can end up with a property that isn’t worth the trouble. Even worse, you can end up losing a lot of money. Here are some things you need to know before getting into the distressed property market.
What are Distressed Properties?
A property is considered distressed when the owner has defaulted on the mortgage. There are two categories of distressed properties: short sales and foreclosures.
In a short sale, the sale price of the home is less than what is still owed to the lender but settles before forclosure. In a foreclosure, the property has been seized by the lender for lack of payment.
Be Financially Prepared
One of the first things you’ll need to do before buying distressed properties is to make sure you have the funds needed to purchase the home. There will also be other costs and expenses along the way, so you’ll need to budget for more than just the initial purchase price.
Before you even start looking at distressed property leads, it’s a good idea to find a lender and get pre-approved for a loan. If you don’t know how much house you can afford, there are tools that can help you get an idea before you start looking. You don’t want to get your heart set on a property only to discover you can’t afford it.
Budget for Repairs
Foreclosed homes are often left in a damaged state with appliances and lighting fixtures missing or destroys. Vacant distressed properties are often a target for vandals and squatters. This means your property will most likely need significant repairs, and you’ll need to budget for that.
Buying a home that needs some extra TLC can save you money since they are often cheaper to acquire. If the damage is severe, however, it may be more trouble than it’s worth. Once you’ve chosen a property to purchase, get a professional inspection so you’ll know the condition of the property before you sign on the dotted line.
Get Professional Help
Even if you’ve purchased distressed properties before, it’s always a good idea to partner with professionals who specialize in this type of real estate. Agents who work with these types of properties have had special training on how to deal with short sales and foreclosures. Trust their expertise.
You can look for an agent that has a Certified Distressed Property Expert certification or one that has extensive experience working with short sales and foreclosures.
How to Find Distressed Properties
Finding distressed properties for sale often takes more than a simple real estate search. This is why it’s important to find an agent who specializes in this area. An agent who knows the market well will be able to direct you to the properties that are worth your time.
When looking at a particular property, it’s also important to consider the surrounding neighborhood. If the entire neighborhood is distressed, you could find yourself sitting on a worthless property no matter how much money you’ve poured into it.
Buying distressed properties can help you find a home for a lower price, or get you in the door of real estate investment. Once you have the information you need and a skilled team at your disposal, you can purchase with confidence.
Whether you’re looking for distressed properties in Charleston, SC, or the surrounding area, the Doll Property Group is committed to giving individualized help to people. We are here to answer your questions, so reach out to us today!