Distressed Properties

What Are Distressed Properties?

Being able to find and buy distressed properties is a very interesting topic for savvy home buyers and investors these days. Knowing where to find distressed properties for sale is only half the battle. It's important for these home buyers to understand the ins and outs of purchasing properties that are in distress. Remember that each home and situation is unique, so you have to do your research to get the best deals out there.

The most important thing to understand before you get started is what are distressed properties? These are homes that have gone through some kind of situation such as a short sale or foreclosure, in most cases. Distressed home sales can also be properties that are in pre-foreclosure or need so much repair work that they are difficult to sell to a regular buyer who wants a move-in ready home.

Distressed properties are often in distressed simply because their owner was unable to make payments. Many times, these properties don't have any cosmetic or functional issues. Instead, they have just gone through a distressed situation.

Types of Distressed Properties

There are several different kinds of distressed properties that you may run across. Here are some examples:

• HUD homes: These properties have been taken back by HUD because a borrower defaulted on an FHA insured loan. They are often priced less than fair market value in order to move them quickly.
• Distressed commercial properties: It isn't only single-family residential properties that can become distressed. In fact, you may be able to find multifamily and commercial properties that are in a distressed situation. Entire neighborhoods of townhouses or apartment buildings can also go into foreclosure.
• Short sales: A short sale is when the lender agrees to take less than the amount owed on the mortgage as a way of getting the property sold to an end buyer. Many times, the lender is willing to take a lot less than pay off simply to avoid going through the foreclosure process. Foreclosure can cost the bank a lot of money in holding costs and attorney's fees.

Is It Possible To Make Money Investing in Distressed Properties?

There is no question that you can make a lot of money by focusing on distressed property for sale. Buying cheap homes for sale allows you the opportunity to make big profits. However, you have to be careful to make sure that you get a good deal on the property up front. If you pay too much or underestimate the amount of repairs that may need to go into the home to bring it up to standard, you can end up in the middle of a money pit.

One of the advantages for buying a distressed property is that you're usually dealing with a pretty motivated seller. You might be dealing directly with the property owner who is trying to avoid foreclosure. On the other hand, you may also be dealing directly with a bank or lender who is trying to sell a property before or after a foreclosure takes place. No matter what, most of the time the parties are very motivated to get rid of the property as quickly as possible.

When dealing with a bank, one of the perks is that there is very little emotion involved in the process. The bank is not tied to the house in any way other than financially. They simply want a certain rock-bottom price. As long as they get their price, you have the opportunity to get a really good deal. Not only do banks want these properties off of their books from a financial standpoint, but they also don't like to have the liability of empty properties.

One of the potential drawbacks to purchasing distressed real estate for sale is that often it needs repair work to be done. However, if you are not opposed to putting some time and money into a property to get it up to standard, you may be able to reap the benefits of looking at distressed homes specifically. Many typical home buyers don't have the resources or knowledge to take care of the repairs necessary with distressed homes.

Here are three top tips for being successful when looking for distressed homes for sale:

• Get pre-qualified for financing: One of the biggest mistakes home buyers make when trying to find a home for sale is not getting pre-qualified first. The last thing you want to do is find the perfect property without knowing how much you qualify for and what kind of loan you can get. It makes it almost impossible to make an offer to distressed homeowners without knowing what kind of financing you have available to you.
• Be a quick decision-maker: You can't take your time when it comes to finding distressed properties. Remember that you have tons of other competitors out there who are trying to get a good deal just like you are. For this reason, you have to be someone who can make quick decisions with very little information to go on.
• Have a bottom line: It's easy to get caught up in the emotions of a distressed real estate investment deal. You are probably already adding up how much money you can make. However, you need to go into the negotiations with a bottom-line number in your mind. This is the best way to protect yourself from paying too much. It might make sense to hire a certified distressed property expert who can help you navigate the process, as well.

How ForeclosureDeals Can Help You Find Distressed Properties

One of the ways that you can save yourself a lot of time when searching for foreclosure homes for sale and other distressed properties is by using ForeclosureDeals.com to get your information. This site is a great clearinghouse that will show you how to find distressed properties in a few clicks of your mouse. From short sales to foreclosures to repossessed homes for sale, ForeclosureDeals.com will provide you with a one-stop solution for finding the best kinds of properties for your needs.