Distressed Properties

Alternative Buying Options – Is a distressed property right for you?

Distressed sales are a sad fact of the real estate market. While no one wants to see a homeowner lose their home, these properties also present unique opportunities for buyers. To determine whether you are a candidate for such a purchase, it’s important to learn all you can about distressed properties—and to work with a qualified buyer’s representative who can guide you through each step of these complex, non-traditional transactions.

• Stage 1. Pre-foreclosure

  a period of time that begins with the initial mortgage default and ends when the distressed property is sold.

• Stage 2. Foreclosure sale

  when the property is auctioned to the highest bidder, someone who also meets the terms of the sale.

• Stage 3. REO (Real Estate Owned)

  if a foreclosure sale is not successful, property ownership is transferred to the lender.

• What is a short sale?

  This is a situation in which a seller owes more on their loan than a sale of the property will produce, and they are unable or unwilling to make up the difference at closing. The seller may or may not be in pre-foreclosure. Banks may consider a short sale to a new buyer to reduce their losses.

• Questions to ask yourself:

  Your buyer’s representative can give you specific guidance based on your situation and the type of distressed property you want to purchase. But for starters, consider these questions:

  • Are you flexible on timing? Can you make a quick decision and/or accommodate months of possible delays?
  • Is your purchase limited by any contingencies, such as needing to sell your current home first?
  • Have you already secured financing?
  • Do you have resources to repair and rehab the property, if needed?
  • If you are buying the property for investment purposes, what is your action plan? Do you intend to rent or resell? Or perhaps inhabit the property until market conditions improve?

   

• Next Steps

  Your buyer’s representative can assist you further in answering these and other questions which will help you determine whether this path to homeownership is right for you.