6 Tips for Buying Distressed Properties

Posted by Jen Dollar on Tuesday, August 16th, 2011 at 1:17pm

If you're shopping for a new home in Central Florida, you've no doubt realized that many of the properties out there are "distressed", meaning they're either in foreclosure or being listed as a "short sale". These properties can offer great value, but there are some things that are specific to buying them. Here are some things you should know.

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When a property is in foreclosure, the bank will take multiple offers on the property. This means that you may be in competition for the property. It also means that you may not hear back from the bank right away once you've made an offer. In some cases, the bank will have an "offer period" at the end of which they'll respond to all offers. This can be frustrating for potential buyers, since you may want to be free to move on other properties quickly if this particular one doesn't work out. Work with your realtor to determine the offer you should make and to try and get details from the bank regarding response timeframes.

Making an Offer

When a property is in short sale, this means that the bank has agreed to take less than is owed by the mortgager. The price you see listed is what the bank has agreed to take. They may not be willing to negotiate with you any further, though you may certainly try. Again, your realtor should be able to advise you on a fair offer.

Choosing a Good Property for You

Don't get too caught up in getting a great deal. Buying a home on price alone is never a good idea. Be certain that the home is one you'll really want to live in by researching the neighborhood and by understanding what you really need and want in a house. Even if you're buying the home to "flip" it or for rental property, you want to be sure that you will be able to resell it or rent it before you buy.

"As is" Property Sales

Banks will often tell you that a property is sold "as is", when it's in foreclosure. However, you should still have the home inspected, and you should ask the bank to make repairs as needed. In many cases, the bank will take the necessary steps to make the home ready for a new owner.

Loan Pre-Approval

Get your loan pre-approved before you make an offer. The bank will look upon your offer more favorably if they know you're pre-approved for the loan. In some cases, loan pre-approval may even be required before you can make an offer on a foreclosure property.

Auctions

Consider attending an auction. Many people who have never been to a real estate auction are hesitant to buy property this way. But, it can be a great way to get an incredible deal. Be sure to tour the property before the auction, so you know what you're buying. And, if you're not planning to pay cash, you must be pre-approved for your loan before the auction, too.

Foreclosures and short sales can be a great way to get a great deal, if you know what you're doing. Working with a Florida real estate professional who is experienced in helping buyers obtain foreclosures and short sales is the best way to get a home you'll love at a great price.

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