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Buying in a Buyers' Market What to watch out for
Distressed Properties: Who is the Seller?
For a Short Sale, the owner (individual) is the seller of the property. For an REO property, the bank is the seller of the property.
Buying a distressed property? You will need…
TIME—Both short sales and REOs will take longer than traditional sales between buyers and sellers. You should allow up to 90 days or more.
FINANCING—If you don’t have very strong financing already lined up, you need to get pre-qualified prior to making an offer.
PATIENCE—Buying a distressed property can be a great way to get a deal on a property, but be prepared for the out of the ordinary.
1. Multiple Contracts
When you are purchasing a home and put it ‘under contract,’ you should be the only buyer pursuing that property. If your listing agent submits your contract as one of many, or even worse, signs multiple contracts, you are in essence entering into a blind auction for real estate. Unless you are an experienced investor, this will likely be an uncomfortable situation.
2. Inspection Allowances
Regardless of what type of property you decide to purchase, you need to make certain
you have the right to have a professional & full review of the property and report to their findings. This is critical!
3. Submit a Strong Contract
Treat a short sale or REO like any other contract and put your absolute best offer
forward. If you truly want to purchase the property in question, make your offer count.
*Pre-Qualification is More Important than Ever!
In today’s market, sellers want to see that you are a strong buyer and that you have been pre-qualified with financing. You will want to meet with at least one (if not two) mortgage brokers or lenders to get pre-qualified.
Make certain you arecomfortable with:
The Mortgage Program
Your Monthly Payment
Any Projected Payment Increases
Payment or Interest Rate Adjustments
Laying out a financial strategy prior to finding a home allows you to confidently target homes in your price range. |
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