Are Distressed Homes Worth It?

I recently read a great Wall Street Article which talks about the advantages and disadvantages of purchasing distressed homes. Having obtained my CDPE (Certified Distressed Property Expert) designation I can attest to the fact that it is a complicated and lengthy process that demands patience and nerves of steel. For the right people and in the right circumstances the distressed property process can pay off big. This year I have worked on a good number of transactions where buyers did really well, and I mean really well! I’ve noticed the ones that were successful showed lots of patience and persistence.
As is often the case the bigger the risk, the greater the reward. Buying foreclosures can involve some element of risk, particularly in the home inspection process. Many lenders only sell “as is” and buyers may take some chances on the physical condition of the home. Typically these defects are pretty easy to identify if you have a good home inspector. Armed with that info home buyers can then decide if they are comfortable making the purchase.

Are distressed properties for you? Here are some good questions you might ask yourself before moving ahead.

1) What is my timeframe? In other words - when do I want to occupy? Short sales involve a very lengthy approval process that can last between 3-6 months before final approval is granted to close the transaction.
2) Am I prepared to lose a home and start over? Short sale lenders may not approve the sale and you might have to start all over. You could lose 3-6 months if this happens. See question #1 for impact.
3) Am I ready to add some sweat equity? Foreclosures often require some cosmetic, minor or sometimes even major repairs. You will need to decide what cost or work level you are prepared to contribute.

Have more questions? Email me and I’ll be happy to share some good info with you.

Thanks for helping me better serve our Real Estate Community.

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