Are you currently in the market for a new home? If so, have you ever considered purchasing a distressed house? If you’re not exactly sure what that means, basically it’s the kind of home that either has significant damage done to it or it’s a place that has gone into foreclosure. And while initially, both of those may not sound very appealing, the reality is that there are several benefits that come with having a distressed house in your possession.
For one thing, you can usually get the house for a really great price. Another benefit is that the closing costs are oftentimes reduced. And, if you are savvy with your negotiating skills, you can oftentimes get the seller to make certain repairs before you move in.
If this sounds like something that you would be interested in knowing more about, we have provided you with a list of five factors to consider when buying a distressed home below:
Get preapproved for your mortgage. One thing to keep in mind about distressed properties is the fact that sales tend to happen fairly quickly. For this reason, bankers are only interested in serious offers—and by that we mean people who have proof that they can afford the home that they are trying to purchase. One way that you can prove that you are that individual is to get preapproved for your mortgage before making an offer. You can get more information on how to get preapproved by going to Zillow or Investopedia and putting “how to get preapproved for a mortgage” in the search field.
Find an agent with lots of experience with distressed properties. Being that it’s not uncommon for distressed properties to come with a series of problems, it’s important that you work with an agent who specializes in them. That way, you can have someone who can assist you in recognizing the blaring red flags and pitfalls that should not be ignored.
Steer away from neighborhoods with lots of distressed homes in them. Although it can definitely work in your favor to find a distressed house in a thriving neighborhood, what you do want to avoid is a foreclosed home that is on a street that has a lot of other foreclosed homes on it. The reason why is that screams that the market value is down and there’s simply no telling when (or if) it will ever rise again.
Hire a professional house inspector. If you were to ask someone who works at a company like Roche Realty Group for some real estate investing tips as it directly relates to buying a distressed home, something that they would definitely tell you is to invest in your own professional house inspector. You don’t want to wait until you actually own the house to discover that it has some significant issues that will end up costing you literally thousands of dollars. Yes, hiring a skilled house inspector is well worth the cost.
Budget for repairs. Our final tip? Make sure that you budget for repairs. We say this because no matter how great the deal on the house may be, because it is distressed, it’s sure to need some work done to it. The good news is that there are websites that can help you to do a lot of repairs on your own. For more information on DIY house repairs, visit DIY Network, Bob Villa or This Old House.