A property becomes distressed if its owner becomes unable to pay their mortgage, and the lender decides to repossess and dispose of the property. In many cases, these properties go at competitive prices that are difficult to find elsewhere. However, you can only get a great deal on a distressed property if you know how to go about the purchase. These tips should help you with the purchase.
Ensure the Neighborhood Is Good
Ideally, only one or two properties in the neighborhood should be stressed. Be wary of buying a distressed property in a location where every second house or so is distressed. If the whole neighborhood is distressed, then there is something seriously wrong with the properties, and you might regret the purchase. For example, might be that the houses were overpriced or the economy of the area is on the decline.
Understand the Necessary Repairs
Not all distressed properties are dilapidated, but many of them are. Homeowners who are struggling to pay mortgage usually don't have the funds to take care of home repairs. Some people even stop careering for their properties when they know they are facing foreclosure. In some cases, the houses stay vacant for some time (and suffer damages) after their owners move out. Therefore, evaluate the properties you are interested in to understand the defects and the repairs you need to undertake after purchase.
Get Specialty Inspections
Due to the high risks of damages with distressed properties, you should get specialty home inspection in addition to the general home inspection. Specialty home inspections are carried out by inspectors who specialize in specific aspects of the house. For example, you may need a plumber to inspect the plumbing system and an electrical contractor to inspect the electrical wiring. That way, you end up with a more in-depth inspection report that the general property inspector wouldn't have generated.
Prepare for an Unusual Process
If you want to buy a distressed property, prepare for a different process than the one you would follow in any other property purchase. Complications and delays are particularly common if you are dealing with the lender and not the owner. Banks are notorious for their slow communications and bureaucracy. There are also laws and regulations that govern foreclosure sales that you ought to learn and follow. Many people find it easy to buy distressed properties through real estate agents rather than go it alone.
The tips above should help you buy a distressed property without regrets. Talk to your agent for further real estate services and help with buying distressed properties.