Often times homebuyers are looking for that “great deal” or “special bargain” on their next home. The old saying, “buy the worst home on the best street,” insinuates that buying a “fixer-upper” home can be a great investment. Others are constantly waiting for a “great investment” or a “wave of foreclosures” so they can swoop in and snag a great deal on distressed assets. While it’s always important to get the most for your money, what else do you need to know about distressed properties? Are they really the best value?
Before you decide to buy, it’s important to understand what is considered a distressed property. While a distressed home might need significant repairs the term “distressed” is actually referring to the financial situation of the seller (foreclosures, short sales, behind in taxes or mortgage payments) rather than the condition of the home.
The home itself may also have material issues that are often related to the owner’s financial situation. Everything from deferred maintenance to major system problems may be present, and a distressed homeowner will not be in a position to make repairs. Selling a home “as is” does not, however, eliminate their responsibility for disclosures and these must be carefully reviewed.
There are advantages to buying a distressed property. Often these homes are offered at prices lower than market value to encourage a quick sale. If the home is considered a fixer-upper, the homebuyer might save thousands of dollars compared to other homes in the area. If you are willing to tackle this kind of project, or have a building contractor you know could assist, then buying a distressed property might be a great solution for you; just ensure you get a comprehensive home inspection so you are fully aware of the condition of the home.
If you find that the projects are beyond your skills, or the cost of major repairs and renovations would outweigh the savings, consider buying a more expensive home that is move-in ready instead. You’ll want to make sure you’re not getting in over your head…or your budget. If you approach the process in this way, the property will be the bargain you hoped it would be.
Please reach out if you are looking for a home and would like to work our experienced real estate team. Contact Us to start the conversation on options and to begin looking at a variety of homes with the goal of finding a great deal on distressed property! We look forward to helping guide you through the process!