Buying a Distressed Property? Three Things Buyers Should Know!

Who doesn’t want the best deal on the market? Anyone? NO! Of course you want the best deal! In today’s market, that means looking at distressed property (REOs: properties that have already gone through foreclosure & Short Sales: properties not yet in foreclosure where the bank needs to approve a short payoff). Because of the nature of these sales, there are things you need to know before purchasing. Here are the top 3 things I make sure to discuss with my clients:

1. Timing – REOs and Short Sales alike can take longer than traditional sales. If you need to move or give notice on your current rental, make sure you discuss your timeframes clearly with your Realtor® and set expectations before you start looking at houses. Part of setting expectations will be making sure you have a customized strategy that will accomplish the goals you set with your Realtor®.
2. Pre-Approved Financing – Part of your strategy should include getting pre-approved from your lender. A pre-approval is different than a pre-qualification. A pre-approval requires you to submit the documentation that supports your income, assets, and credit history. Once you are pre-approved, you have your “golden ticket” to start home shopping!
3. Patience, Patience, Patience! Be prepared for delays at every turn. Some markets (like CA) are beginning to experience a shortage of inventory, which makes the offer process very competitive. Be prepared to put your strongest offer forth and don’t get discouraged if your offer isn’t accepted. New inventory comes on the market everyday. Even once your offer is accepted, don’t hold your breath yet. You still need to do your inspections, the appraisal needs to be done, the loan docs need to be ready for signing, and undoubtedly you’ll need some bank official’s signature on some obscure form that’s required for closing. Rely on your Realtor® and loan officer to keep you updated on the process and help you understand the reasons behind any delay. Take it step-by-step, one hurdle at a time and you will make your way to closing!

Don’t shy away from distressed properties, they just require savvy buyers! If you’d like a list of distressed properties in your area, Contact Me. Even if you aren’t in CA, I can connect you to a top-notch Realtor® in your local market who can help!