5 Tips to Remember if you’re buying a Distressed Property

While today’s inventory of distressed properties isn’t as robust as it once was, with markets recovering and home prices steadily increasing, these types of properties are still very desirable to many buyers. In areas like Denver where prices are high and options are limited, distressed housing can be a great alternative.

Distressed properties typically fall into three categories:

  • Foreclosed homes – most often occur when a homeowner is no longer able to make the mortgage payments and the lender seizes the property. These homes are sometimes sold at auction to the highest bidder.
  • Real estate owned (REO) properties – an REO is one that has reverted to the mortgage lender after the home fails to sell in a foreclosure auction. Once the bank owns the property, it typically handles any necessary eviction, pays off tax liens and possibly even does some repairs.
  • Short-sales – When a homeowner sells his or her property for less than the amount owed on their mortgage, it is known as a “short-sale.”

If you’re considering purchasing a distressed property, keep the following tips in mind:

  1. Banks need to approve your offer, and they typically only consider serious offers. Getting mortgage preapproval before you make an offer on a distressed house is crucial.
  2. It’s likely you’ll be competing with investors, house flippers and larger property management companies. These folks often pay in cash. If you’re obtaining mortgage financing, you’ll have to prove you’re a solid buyer if you want the best shot at getting the bank to consider your bid.
  3. Distressed property sales can have a number of unique problems and pitfalls. These homes are typically sold “as-is”, which means what you see is what you get.
  4. When picking a real estate agent, find one who has experience handling distressed home sales. The right real estate professional can help guide you through the unique process of purchasing a distressed property.
  5. Be careful about looking for a distressed property that’s located in a distressed neighborhood. If every house on the block is going into foreclosure or if every condo in the high-rise is vacant, you should probably look elsewhere.

If you’re considering a distressed property, contact Metrowest. We specialize in these types of sales and would be happy to teach you more about the process and show you what Denver has to offer!

 

Ken Blevins

About Ken Blevins

Ken Blevins, CEO of Metrowest Real Estate Services, is a veteran in mortgage and default servicing with more than 24 years of experience in collections, foreclosure/bankruptcy, loss mitigation and real estate disposition (REO). Blevins was an original co-founder of Metrowest in 2003, a Real Estate Brokerage and Services Company focused on the resale, recovery and liquidation of distressed real estate in Denver, Colorado and surrounding metros. Blevins assumed the role of CEO in January 2014 and provides strategic direction and has management accountability for the day-to-day operations. Under his direction, Blevins drives all default management operations to maximize asset value recovery and reduce loss severity through a strategy focused on customer service and state of the art technology. Blevins has 18 years of direct operational experience in all facets of REO Asset Management having managed large national REO Disposition contracts for Fannie Mae, Freddie Mac, Wells Fargo, JP Morgan Chase, CitiFinancial, GMAC Mortgage and other various financial institutions. Blevins specialties include REO asset management, real estate investment, bulk REO acquisitions and distressed asset recovery and liquidation, and he has directed the resolution and liquidation of over ten billion in institutionally-owned residential real estate.

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