Distressed properties are homes whose owners have fallen into a situation where they can no longer maintain the home, whether it is making payments or the maintenance of the property itself. Most of these properties have been neglected and are in poor condition, or they are at risk of foreclosure. Whichever the case, there are now a lot of people that are looking to purchase these distressed properties and flip them for a profit. In today's blog, we have laid out for you some of the pros and cons of purchasing a distressed property and hopefully can shed some light on what should be considered before doing so.
- You can get generally get these homes for an incredible price. Especially in the case of a current or possible foreclosure, the homeowners are in a rush to sell, so due to the time constraint you can get a great price. Of course this is not guaranteed as there are other players in the game that may outbid you.
- If you are a new home buyer and find a distressed home that is not neglected or in too poor of condition, you stand to get your first home for a great price and should be able to easily increase your home value over time.
- In most cases purchasing a home in this category may allow you to get a low mortgage rate and/ or inexpensive financing.
- There is a reason these homes are needing to be sold as "distressed", so the conditions can likely be not ideal and in some cases may be in extremely bad shape. It can still be a good purchase if you have the funds to accommodate all the repairs and fix's the home calls for.
- Some inspector's may be weary to look at a distressed property and have their name attached to something that could have so many bad and possibly hidden issues.
- Depending on the home's condition, it may not meet lender requirements. So if you are unable to purchase with cash, be sure to do your research and make sure you would be able to meet all requirements with the purchase.
- There can be a serious amount of paperwork involved. These properties are often times coming with a good deal of baggage, so the process requires patience.
All in all, it can be a gamble, often times it is one worth taking, but you want to do your research and know exactly what you are getting into. We recommend consulting a trusted real estate advisor, someone who can navigate you as to which homes are worth purchasing and which are not. Also finding a home inspector that will give you guidance and who is willing to take a look at these homes would be highly recommended.
We hope this gives you a bit of insight into purchasing distressed properties. As always, we encourage you to reach out to one of our agents here at Core Group who would be more than happy to guide you through this process. You can also visit our "Service Providers" page for a list of our approved home inspectors, remodel experts, and so much more.