In hot real estate markets like Denver, would-be buyers often include distressed housing in their property searches to expanding their options. If you’ve been considering this type of property, it’s possible to find a great value, but only if you know what to expect along the way. Think a bank-owned home, foreclosure, or short sale might be right for you? Make sure to keep the five steps below in mind as you make your decision.
1. Find an experienced agent- Buying a distressed property isn’t necessarily harder than traditional homes, but the processes are quite different. The first step in buying any type of distressed housing is to find an agent who’s familiar with the process. They’ll be able to guide you through the process and answer any questions along the way.
2. Get pre-approved for a mortgage –Unless you plan to pay cash, you’ll need a recent preapproval letter from a lender. The letter will detail how much money you can borrow, based on the lender’s assessment of your credit score and income. Don’t think you can find the home first and then secure financing – these types of properties go quick.
3. Keep pricing expectations realistic- There’s no rule of thumb on what the bank’s bottom line is on price. Just as with any other real estate purchase, you have to evaluate the recent sales prices of comparable properties in the area. Sometimes the bank prices the homes really low, and the home will have multiple offers over list price within hours.
4. Bid the higher price if homes are selling quickly- If the foreclosed homes you’re looking at are selling fast, the best advice on a bank-owned property is to come in at your highest and best, unless the property has been sitting on the market forever with no activity.
5. Remember, the home is sold as-is- Keep in mind that foreclosed houses generally are sold as they are. That means that you shouldn’t expect to get a discount to compensate for repairs.
If you’re ready to check out distressed property options in the Denver area, give Metrowest a shout. We specialize in these types of sales and would love to help you start the process!