In California there’s a housing shortage and home prices are unstable. Many people are finding it difficult to buy a home. At times it is a difficult environment to find a home, especially for first time buyers who don’t always have the financial resources. As an alternative, some have been looking into buying distressed properties. But before entering the market, here are some helpful things to know about distressed properties.
Distressed properties are properties which are being sold through default or because the present owner is no longer able to pay the mortgage, commonly known as repos.
There are also “short sales” in which the owner is trying to sell the house for less than is owed on it with the lender taking the hit for the difference in order to avoid an unwanted foreclosure.
There are those that have gone into foreclosure in which the banks and other lenders auction off properties that have been repossessed from owners who have defaulted on the loan.
There may be other forms of distressed property sales but for the most part it will be one of these discussed.
All distressed properties have the advantage of being sold for less than the apparent value although in some cases it won’t be dirt cheap. Among the disadvantages are that most of the time these homes come with baggage. Meaning that the process may take more time and effort. There may be legal issues as well as major repairs involved.
If you’re needing to move right away this may not work for you because of the time involved. If you’re an investor you may have the time to wait. If you have a particular house type or neighborhood in mind you may not find what you’re looking for.
Buying a distressed property isn’t for everyone and is usually the realm of investors who have the resources and experience to deal with all the issues and problems related to buying a distressed property. If you’re the type of person that is willing to put in the work and deal with the problems, it can be the way to go.