Tips & Tricks for Buying a Distressed Property

If making your real estate dreams come true on a budget is important to you, distressed property is a good choice. Most of the time, banks that take back these homes want them off their list of liabilities as soon as possible. So, these homes can be bought for a lot less than the market price. With these deals, you can get some great property if you know all the right tricks. 

Contents

01. Tips & Tricks for Buying Distressed Property

• Find an Experienced Agent
• Stay Away From Groups of Troubled Homes
• A Professional Home Inspection
• Understand The Law
• Make a Maximum Down Payment
• Negotiate Effectively
• Legal Troubles
• Bid Competitively

There are a lot of problems that only happen with real estate that is in trouble. So, it’s best to find a real estate agent or property consultant who has experience with these kinds of properties. The National Real Estate Development Council (NAREDCO) has courses for people who want to become real estate agents or who are already in the business but want to specialize. If the agent has this certification, you can trust them to give you good advice about properties that are in trouble.

Purchasing distressed property at a dirt-cheap price may be a smart move if you perform the necessary repairs and maintenance. But all of your work will be for nothing if the property you buy is in an area with little or no market interest. Most of the time, distressed properties from the same neighborhood are sold at auction together. Make sure you don’t buy into a deal like this.

Unlike when a home is sold normally, the seller of a distressed property does not fix any problems with the home. If you hire a home inspection service, they will be able to tell you what kinds of repairs need to be done and how much it will cost to fix them. You can look at the website of the Home Inspection Association of India (HIA) to find out if the home inspection company you hire is a good one.

The Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest (SARFAESI) Act, 2002, sets the rules for the sale of foreclosed and distressed properties. You need to know everything about this Act and the Security Interest (Enforcement) Rules, 2002, in order to fully understand how the bank will sell the house. When a person sells a piece of property on their own, you should be especially careful about these laws.

Before you buy a distressed property, you should make sure that your finances are in good shape. When you make a big down payment on a house, the seller thinks you are serious about buying it. Keep the down payment between 20 and 25 percent of the home’s asking price.

As the buyer of a distressed property, you do have some power in price negotiations with the bank, lender, or seller. You can ask the lender to take a look at the property and give you a report. If the price set by the appraisal is less than what the house is worth on the market, you could try to get the bank to accept a lower offer.

When the bank is about to sell a home that is a distressed property, the former owner may sue the bank to stop the sale. If the case goes to court right before you buy the property, you may have to pay a lot for a lawyer’s advice. So, it’s best to deal directly with the owner, since no one else with a stake in the sale could try to sue the seller.

When competing in foreclosure, you should set a limit for yourself that takes into account your budget, the number of extra costs, and the way you want to pay for things. One important thing to keep in mind is that the bank selling the property will not give you money to buy it. So, you need to know what your options are ahead of time. There are two things you should always keep in mind. The first is that the bank is not emotionally attached to the property and doesn’t have crazy price expectations. Second, every day that the property is put on hold, the institute loses money.

There are a lot of other tips and tricks you can use to make the best choice when making a deal on a distressed property.

Disclaimer: The opinions shown above are mainly for informational reasons and are based on market research. Deal Acres is not responsible for any actions made as a result of relying on the provided material and makes no representations as to its accuracy, completeness, or reliability.