If you have been dabbling in the foreclosures business you will have come across distressed home sales. These homes are sold by the owners themselves or their lenders to prevent the stigma of foreclosure. Let us say the owner has fallen on bad financial times and faces the prospect of foreclosure, the lender may opt to sell the property in a short sale to prevent foreclosing on the home owner. This way the borrower’s credit reputation is saved and the lender would not have to initiate foreclosure proceedings, which sometimes have a tendency to drag on.
It is no wonder that distressed home sales are pretty common, and they go by a lot of names. A distressed home can also refer to for sale by owner properties or FSBO, pre-foreclosure sales and short sales. Whatever they may be called they mean the same to both the seller and the buyer. For the seller, distressed home sales provide an easy way out of their financial bind and for the buyer they are attractive investment options.
Knowing the Basics When Buying
Dealing in distressed home sales can be very lucrative for property investors or new home owners but one can never be too cautious as in any big purchase. First you need to have a good credit standing to qualify for home financing. You also need to have a clear idea on the type of home you want and its location. These two considerations have the biggest impact on your budget. They you may want to consider using a foreclosure listings service, which can save you time and money from the time you start your search to the point where you are ready to sign your name on the dotted line.
When buying distressed homes the lender will give you the time you need to inspect the property before making a decision, take advantage of this opportunity by bringing along a seasoned contractor when you conduct your inspection as they have the eye for whatever repairs are needed in the home and the amount it will all cost. You would also want to enlist the help of a real estate lawyer to scrutinize the property’s title for hidden liens or holds that you will absorb when the ownership is transferred to you. With the right set of information you can begin negotiating for the price, be aware that lenders will be very inclined to give you a good discount on the final price.
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