Buying a distressed property (foreclosure, short sale, or bank-owned home) can be a great investment for first-time buyers, but the better you understand the process, the better your experience will be. Below are 6 must-do’s before you make an offer on this type of property.
1) Never buy anything without seeing it first -It may be fair to assume distressed property owners may not have been able to keep up with home maintenance, however, to what extent is unknown until you have the property inspected. For this reason, you must never purchase a foreclosure sight unseen.
2) Find an agent experience with distressed property sales – Someone who’s experienced in distressed sales will be able to help you better navigate the waters of this type of purchase.
3) Understand what it will take to make the home livable – After your home inspection, you’ll have a good idea of the repairs that will be necessary before you can move in. These can range from cosmetic updates to more in-depth repairs or renovations. Before you make an offer, you’ll want to have a realistic idea of how much you’ll have to spend to make the home what you want.
4) Know what similar houses are going for – Your agent will be able to provide actual sales prices for similar nearby properties that have sold recently, not asking prices or unreliable estimated values.
5) Bid competitively – Just because a property is distressed doesn’t mean it’s being given away. Set a firm maximum price that’s within your budget and near the property’s actual value.
6) Line up your financing and earnest money in advance – With any home purchase, it’s important to know what you can afford before you start shopping. And if you’ll be using a mortgage to pay for the home, having financing lined up is one of the best ways to prove to the seller that you’re a serious buyer and increase your chances of having your offer accepted.
Denver has one of the lowest inventories for distressed properties, but there are good deals to be found if you know where to look. Metrowest specializes in these types of sales – give us a shout today and let’s start the process!