Buying a Distressed Property
Buying a home is a big step, and you want to make sure the get the absolute most for your money. At the same time, savvy home buyers are always looking for ways to cut costs, and one way to accomplish that goal may be through buying a distressed home. For those who aren’t put off by the thought of home renovations, distressed properties present a challenge. If you’re willing to invest the time and money in both finding the right property as well as fixing it up, buying a home that’s a little rough around the edges can result in owning a home that is worth way more than the original purchase price. For anyone in the process of buying a home, decisions regarding where and when to buy aren’t always easy. For those adventurous types who choose to renovate distressed properties, being able to spot a good deal at the right time is key. In deciding whether buying distressed property is right for you, it’s important to know both the pros and cons involved with buying distressed property, as well as to know where to look if you’re in the market.
Pros and Cons of Buying Distressed Properties
The major motivation for buying distressed property is the price. Being able to find a home priced well-below market value is appealing, but it’s important to realize what you’re getting into before making your purchase. Unfortunately, while New York property laws typically require a property condition disclosure form for sales of homes and real estate, the law often exempts foreclosures. While some distressed properties are in decent shape, others will require extensive repairs. Having to do repair work on a home doesn’t necessarily mean it’s a bad investment, especially if the initial cost combined with the location and market value make it worthwhile. Having a realistic time frame for when you’ll move in can save a lot of headaches. Having funds put aside to pay for repairs and a list on hand of independent contractors, such as electricians, roofers, painters, and plumbers, will ensure you’re ready for whatever home renovation projects lay ahead.
Finding Distressed Properties
Distressed properties are often those that have gone or are going through the process of foreclosure. Often, these properties are sold through a short sale, in which proceeds from the sale of the property fall short of actually paying back the debt. In these cases, sellers can no longer afford to pay the mortgage on the property, and in lieu of foreclosure, the bank agrees to accept whatever money is obtained through the short sale to release the lien. A popular internet scam involves offering lists of foreclosed properties and short sales in exchange for a fee. These lists offer information you can easily find yourself, and prospective buyers can locate both foreclosures and short sales either online or through the classified section in newspapers.
Auctions are another way prospective buyers find distressed properties. A recent auction of houses damaged by hurricane Sandy included 150 of 700 damaged homes that had been sold to the state. Sales were to the highest bidder, and bidding started as low as $30,000. Proceeds from the sale went to the State Community Development Block Grant Disaster Recovery Action Plan. Run by the State Governor’s Office of Storm Recovery, potential bidders could preview the homes online prior to the auction.
Contact Our Experienced Real Estate Attorneys
When buying a home, every detail is important. At Cavallo & Cavallo, our experienced New York real estate attorneys can help guide you through every step of the process, ensuring you find the right home to fit both your needs and your budget. With offices in the Bronx and Westchester, we’re your neighborhood law firm, providing efficient and effective legal service to handle all your real estate needs.