In California there’s a housing shortage. With home prices on the rise, many people are finding it difficult to buy a home. Home builders are working at a feverish pace to fill the need but it’s still difficult for the first-time buyers to afford a new home. As an alternative, some have been looking into buying distressed properties. Before entering the market, here are some helpful things to know about distressed properties.
Distressed properties are those which are being sold through default or because the present owner is no longer able to pay the mortgage.
Some are sold as “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 foreclosure.
There are foreclosures 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. 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.