If you are a fan of reality TV, you have probably noticed an overabundance of house-flipping shows, and each show paints a picture of a little hard work followed by nearly risk-free profit for those who endure. You may not be surprised to find out that sometimes reality TV is anything but real. Even if you are not looking to build a career as a home flipper, you might be in the market to purchase a short sale or foreclosed property. These properties are often called distressed properties.
Regardless of where you dabble in the financial marketplace, one obvious but key fact is worth noting: Financial risks that work out in your favor are sometimes handsomely rewarded, and those that do not are almost always severely punished. This begs the question: Is a distressed home a risk worth taking?
In January 2012, one out of every 624 homes was served with foreclosure paperwork. Once the federal government settled with the nation's largest banks concerning the robo-signing scandal, a new stock of foreclosed homes hit the market. By the end of the first half of 2012, foreclosure documents had been served to more than 1 million homeowners, according to RealtyTrac. Although some believe bargain basement prices for distressed properties may be ending, a large inventory still exists.
Who Should Consider Distressed Properties?
Distressed properties often come with baggage. This could be in the form of mild to severe property damage, unpaid HOA fees, taxes, second mortgages and various other liens. Distressed properties are rarely move-in ready. Significant renovation and repair costs could eliminate any potential profit. Homebuyers with the time, skill and experience to conduct large-scale renovations will find these properties a better value.
Since distressed properties are bank owned, the amount of time it takes to accept or decline an offer can sometimes be weeks or months. Approval time often lengthens with title issues or other questions of ownership. Sorting out these details is best left to experts.
Low prices and an improving economy have caused investors to go after distressed properties. Because of this, a bidding war among aggressive investors can leave individual homebuyers on the sidelines. In cases where an individual beats the dueling investors, the price is often much less of a steal than it would have been.
According to the Wall Street Journal, experienced foreclosure buyers often bid significantly higher than the asking price. Just because it is distressed does not make it a bargain. Sometimes a traditional sale will yield a better price with faster results.Investo
If you are a fan of reality TV, you have probably noticed an overabundance of house-flipping shows, and each show paints a picture of a little hard work followed by nearly risk-free profit for those who endure. You may not be surprised to find out that sometimes reality TV is anything but real. Even if you are not looking to build a career as a home flipper, you might be in the market to purchase a short sale or foreclosed property. These properties are often called distressed properties.
Regardless of where you dabble in the financial marketplace, one obvious but key fact is worth noting: Financial risks that work out in your favor are sometimes handsomely rewarded, and those that do not are almost always severely punished. This begs the question: Is a distressed home a risk worth taking?
In January 2012, one out of every 624 homes was served with foreclosure paperwork. Once the federal government settled with the nation's largest banks concerning the robo-signing scandal, a new stock of foreclosed homes hit the market. By the end of the first half of 2012, foreclosure documents had been served to more than 1 million homeowners, according to RealtyTrac. Although some believe bargain basement prices for distressed properties may be ending, a large inventory still exists.
Who Should Consider Distressed Properties?
Distressed properties often come with baggage. This could be in the form of mild to severe property damage, unpaid HOA fees, taxes, second mortgages and various other liens. Distressed properties are rarely move-in ready. Significant renovation and repair costs could eliminate any potential profit. Homebuyers with the time, skill and experience to conduct large-scale renovations will find these properties a better value.
Since distressed properties are bank owned, the amount of time it takes to accept or decline an offer can sometimes be weeks or months. Approval time often lengthens with title issues or other questions of ownership. Sorting out these details is best left to experts.
Low prices and an improving economy have caused investors to go after distressed properties. Because of this, a bidding war among aggressive investors can leave individual homebuyers on the sidelines. In cases where an individual beats the dueling investors, the price is often much less of a steal than it would have been.
According to the Wall Street Journal, experienced foreclosure buyers often bid significantly higher than the asking price. Just because it is distressed does not make it a bargain. Sometimes a traditional sale will yield a better price with faster results.Investo