Ex Health & Home Shopping Staff Website

Home  |  Memory Lane  |  Products  |  Leavers Poem  |  Articles  |  Guestbook

Distressed Properties - Financial Problem or Solution?

Distressed Properties - Financial Problem or Solution?


Distressed Properties - Financial Problem or Solution?

by Tara Millar

With the manner things are moving in the real estate market, it's become a veritable lot of real estate properties with very cheap value tags! Off hand, we will say that indeed we are in a buyers market. We have a tendency to say that homebuyers never had it so good with the increasing number of properties being offered at very cheap prices within their community. Can we then go all out in absolute confidence that everything out there promises to be a homebuyer's dream deal? Sadly, this is not always the case.

The deal takes on a very different complexion when we think about distressed properties. You are getting into a volatile space in the real estate market if you decide to explore your best choices among the distressed properties being offered for sale at "discount" prices.

Distressed properties include short sales and bank-owned properties. It's vital that you just fully understand the intricacies moreover because the dynamics of deals involving these types of real estate properties. Foreclosed homes are outlined as distressed properties for the one reason that their homeowners weren't able to fulfill their monthly mortgage obligations leaving the bank with no other recourse but to foreclose the subject property below the terms of the mortgage agreement. These properties are then sold through auction. These foreclosed homes become REOs or bank-owned if they're not sold through auction.

On other hand, a short sale comes about when a distressed property is offered for sale at a worth that is considerably not up to what the homeowner truly owes their lender. In result, the lender is giving their imprimatur by consenting to a reduced payoff to shut out a problematic mortgage account. Short sales happen when homeowners are in default in their monthly payment obligations and opt to lose the distressed property prior to the initiation of foreclosure proceeding. A short sale could additionally be undertaken if the homeowner losses a important portion of his equity and works out an agreement with the lender to lose the property to settle his existing mortgage obligations.

In each home buying opportunities, buyers tend to bid for additional time and wait it out on the sidelines with the anticipation that the worth will still decline. There is conjointly this notion that lenders are hard-pressed to get rid of their inventory of REOs and will accept bargain offers simply to offload these distressed properties. This is just one side of the story, that is typically the position taken by optimists.

However, if you concentrate on yourself as a wise buyer, then you have got to look at the "dark side" of the deal. The longer these distressed properties remain within the hands of lenders, the more they lose their value. An REO is a shut down property which makes it at risk to serious injury and deterioration. You may also have to contend to an assortment of issues as well as moisture issues, vandalism, frozen pipes, broken electrical system, pests, etc.

There are a considerable number of distressed properties in perfect state at the time of offering that quickly turn into a useless pile of ramshackle properties after only a few months. Therefore, before you opt to wait out until prices can bottom out, you have got to understand that the property can still deteriorate at a faster pace and whatever discount you might have will just be negated by the absolute degradation in price of the property.

You stand to lose your proverbial shirt if you do not apply smart judgment when choosing to go for distressed properties. There are not any safety nets or guarantee for a rundown REOs. Keep in mind the golden rule when shopping for distressed properties - caveat emptor.

About the Author:
Another great article by Scarborough real Estate Get a totally unique version of this article from our article submission service

Top of Distressed Properties - Financial Problem or Solution? Page
Back to Articles Page
Back to the Ex-Health & Home Shopping Home Page