Remember that Detailed home Inspection you Need to Get?
And those extensive repairs that you might have to make? Finally, buying bank-owned properties puts a lot of the onus on the buyer to settle costs that the seller would cover in a normal sale. You don’t want to insult the lender’s intelligence. Banks don’t spend a lot of time with multiple counteroffers, so you can’t start too low. Making an offer on a distressed home can be trickier than you think. You would think you could just cover them with the loan you take out, but if the damage is too extensive, lenders may not even approve your loan. While you might think you could just make a lowball offer and expect the desperate homeowner and lender to take it, that’s not the case.
That’s in addition to the home inspection. There are all kinds of delays, frustrations and red tape that you will have to endure if you are buying a distressed property. Unlike a normal sale, where you deal primarily with the homeowner, distressed sales involve dealing directly with the lender, who has to approve the final sales agreement. The contractor should make estimates on what the repairs will cost, so you can take that cost into account when making your offer.
For one thing, you’ll be competing with investors. From “house flippers” who fix up damaged homes to resell at a markup, to larger property management companies, investors are taking advantage of historically low homes sales to make a profit. So if the property is in need of extensive repairs, you might have to put up extra cash, or take out a second loan to cover the costs. There are a few pitfalls to look out for when seeking preapproval.
Buying a distressed home is not all problems and headaches. That’s especially true if the distressed home is in poor condition. Gengler, Amanda. “Making the Right Moves.” Money. Gibbs, Lisa. “Why to Buy Trouble.” Money. McQueen, M.P. “Are Distressed Homes Worth It.” The Wall Street Journal. Fulmer, Melinda. “Buying a Foreclosure? Plot Your Strategy.” MSN Real Estate. McCrea, Bridget. “This Old House?” Black Enterprise. If the bank refuses to make any concessions in price for a home in bad need of repair, ask your lender to conduct their full appraisal of the property. Perkins, Broderick. “Is Your Agent Experienced in Distressed Properties?” Realty Times. The Wall Street Journal. You do have some leverage as a buyer in negotiating a price with the lender.
It might only be a few years or it might be their forever home, but they want someone who listens to their needs and goals, and who understands what “home” really means to them. They may want to pick something small and easy to take care of, or a more grand home they can really grow into. In residential real estate, there are plenty of options for a person to find a home they like. There are choices on both ends of the spectrum, and nearly everything in the middle of those extremes. In residential real estate, customer service is king. After zeroing in on the type of home a client would like, small variations between them can make all the difference when it comes time to choose.
That may mean the size of the parking lot, whether people coming in or out have to turn across traffic on a busy highway, if the building is handicapped accessible, whether there are renovations needed to fit the buyer’s needs, and much more. Some people who buy commercial property do so as a location for their own business, but many do it with the idea that they will own the building and will rent it out to tenants. Not all businesses are the same, and their real estate needs will vary accordingly. Commercial real estate agents must understand the business aspects of these purchases.
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