How To Find Distressed Properties: 9 Proven Strategies
Foreclosure activity in the U.S. is on the rise, with overall foreclosure activity increasing 16% from last month, according to a recent report by ATTOM Data Solutions. States with the greatest monthly increase in foreclosure starts include Utah, North Carolina, Michigan, and Georgia.
Distressed properties can be very attractive to real estate investors, but you need to know what to look for and where. In this article, well explain how to spot a property in distress before the competition does, and explain how to find and qualify distressed property deals.
How To Shop For A Distressed Property
The biggest mistake that I see people make when shopping for distressed properties is that they use the same price range as they would for arms-length properties. Here’s what I mean.
As an example, say that you can afford an $800K home. Most buyers would search $700K to $800K to find the complete list. But if you are shopping for a distressed home, you need to recognize that your budget needs to include money for modifications, updates, and repairs. An $800K buyers will find the best deal when shopping between $500K and $700K. Obviously, this example applies at all price ranges, lower your search range so that you’ll have enough money to bring the property to the condition you desire.
What Are The Risks Of Buying Distressed Properties
There are many potential benefits to buying a distressed property, but these purchases can be risky. If youre a first-time home buyer, you should consider whether the risks are worth the potential rewards.
The house may seem like an incredible bargain. But you need to consider whether youre ready to handle the delays, disappointment, and expensive repairs that often come with distressed properties.
Here are a few of the most significant risks that come with buying a distressed property.
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Ways To Find Distressed Homes For Sale
If you are still a beginner real estate investor, you may be wondering how to find distressed homes for sale. Well, first, it is important to note that nobody refers to their home as âdistressed.â Simply searching for âdistressed homesâ online wonât give you much. With that said, here are eight creative ways to find distressed homes for sale near me:
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And that search can be performed at the state, county and city levels even the exact address and/or zip code so that your house hunt hits the ground running. Once you start digging into the incredible foreclosure deals, each listing will be complete with asking price, exact location, number of beds / baths, property type , available photos, tax roll information, helpful neighborhood / school district details and so much more. Indeed, we provide as much information as possible so that you can make the most informed decision possible.
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How I Find You Foreclosure Houses For Sale
It doesnt get easier than this.
Simply fill out the form below and provide me with some general criteria regarding your buying preferences. From there, Ill compile a list of currently available foreclosure houses for sale and distressed homes for sale and Ill send it your way. The list will include Guelph homes that are either bank-owned or vacant, the latter of which can in some cases be an indication that a home is distressed.
Youll also have the option to have this information entered into a private account that emails you new listings as soon as they are entered into the MLS. Doing so, youll learn about distressed properties for sale in Guelph as soon as they enter the MLS.
To receive a list of potential Guelph distress sales and bank-owned homes, simply fill out the form below. I also encourage you to read my blog for advice related to aspects of buying or selling distressed properties and Guelph foreclosures.
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Disadvantages Of Distressed Properties
While prices may be the lowest, buying a distressed home does come with the risk of having the poorest conditions. If you purchase a distressed home with inhospitable conditions, it is vital to save funds for repairs or hire contractors. Usually, foreclosed homes will be up to less than mediocre standards compared to other homes in the area. You may have to purchase appliances or make drastic electrical and plumbing repairs. You may have to opportunity for a thorough home inspection. However, you will still have to finance any repairs to the distressed house.
On top of the actual condition and necessary repairs of the home, you may also run into issues when it comes to actually purchasing the distressed property. Buying a foreclosed home is different than buying a home that is current on its mortgage. First, you will need to buy the home at auction. This can be an in-person auction or an online auction. A major drawback to the auction format is that you may be outbid at the auction, resulting in a higher price than you wanted to pay or someone else walking away with the purchase. The sale will then need to be finalized after the auction before you are actually allowed to buy the property. Another drawback to buying a foreclosed home is home long it actually takes. There are many reasons for purchasing delays, and these delays can make the closing process take between 6 and 12 months. For comparison, a traditional home sale usually takes between 6-8 weeks to close.
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Cons Of Buying A Distressed Property
- Negotiating a short sale with a bank can sometimes take months from start to finish.
- Possibility of being outbid if you buy a distressed property at an auction.
- May need to move fast, pay in cash, and finance after repairs have been made.
- Distressed properties are sold as is, where is with few if any warranties and numerous required repairs.
- Investors may need to pay encumbrances such as tax liens or an unpaid mortgage before owning a distressed property free and clear.
Who Invests In Distressed Properties
Both homebuyers and real estate professionals frequently choose to invest in distressed properties. Homebuyers hoping for a fixer upper and lower purchase price, may find these homes to be an excellent opportunity. Distressed properties can also give homebuyers a chance to break into fast-moving markets, as there may be less offers to compete with. Real estate investors are typically interested in distressed properties for the same reasons. Distressed homes often have a lower purchase price and feature highly motivated sellers in many cases. These characteristics can help investors secure more profitable deals.
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Distressed Property Auctions And Sales
If the homeowner does not sell their property before the scheduled date of the foreclosure sale, the property will be sold at public auction by the lender or a trustee of the lender. Distressed home auctions are the most common way that most buyers find foreclosure homes for sale. Auctions happen all the time all over the country, and they are certainly one of the most straightforward ways to buy real estate of any kind. All you have to do is show up on the day of the auction ready to bid, and if you’re the winning bidder, the property is yours. Of course, there’s a lot of preparation that goes into buying cheap homes for sale at foreclosure auction. You have to be sure to secure your financing before hand so you can pay the amount of your winning bid, and you have to do as much research as you can into the property you want to buy before the sale to make sure it’s a good, valuable investment. But whether you’re a certified distressed property expert or a novice homebuyer, the auction process cuts out all of the red tap of a typical home sale. You won’t have to haggle with an agent, and you’ll be issued a Bill of Sale as soon as the auction is over. It’s a fantastic way to buy property, and at 30% to 60% off market prices, the discounts are just as deep as you’ll find anywhere else.
Foreclosurecom Updates Its Nationwide Database Of Foreclosure Listings At Least Twice Each Day
Not weekly or monthly like other sites out there. This ensures that we offer prospective homebuyers and investors with the freshest, hottest deals on the Internet. In fact, most of our information comes direct from hundreds of corporate sellers and multiple government agencies so that you can score the deal of a lifetime in some cases foreclosed homes for less than $60,000! Find cheap homes under $60,000. Whether your looking for a single-family home, condo, townhouse, or even searching for mobile homes near you, Foreclosure.com keeps the most up-to-date listings of all property types. The best part about searching Foreclosure.com is that we make the experience so simple that anyone can do it. And if you run into a problem or have questions that aren’t covered in our “Frequently Asked Questions” section, we have a dedicated support staff of actual humans who are knowledgeable and eager to help you achieve your American Dream of affordable homeownership. Call us today … or any day!
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Sift Through Government Records
A search of local government records could yield very promising leads in your search for investment properties.
You can use searchable databases on most county websites to find potential properties. Otherwise, you can visit your local courthouse or clerk and recorderâs office in-person.
When looking through local property tax records, look for properties with delinquent tax payments. These properties are likely headed towards foreclosure, and the sellers may be very motivated to sell.
If youâre looking through local court records, keep an eye out for delinquent mortgage payments, as these properties may soon be seized by the bank. The owners might be eager to sell, and you could get a great deal.
Join Real Estate Auctions
When thinking of how to find distressed properties for sale, you may also want to look at real estate auctions. At real estate auctions, you will be able to find several distressed properties in different stages of the foreclosure process. They include short sale homes and REO properties. With some research, you can find out about the real estate auctions taking place near you, attend some, and bid. There are also several online auction listing sites that you can consider to place your bid. One example is Auction.com.
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Pro: You Can Reap Huge Upside Upon Resale If Youre Renovating A Distressed Property In A Desirable Neighborhood
If youre purchasing a distressed property in a desirable neighborhood, this can lead to a significant upside once you renovate and sell. Highly desirable neighborhoods tend to appreciate in price much better than other areas. Plus, if you purchased the home at a discount, this could lead to a significant increase in equity.
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Take A Drive To Look For Early Signs Of Distress
If thereâs a particular neighborhood youâre interested in, watch for properties that arenât being properly maintained. Properties rarely become distressed overnight, and it can be relatively easy to spot homes that are headed towardsbank ownership.
They may be slated for foreclosure, affording you an opportunity to snatch them up.
Look for signs like:
Notices posted on doors or windows
Homes that are noticeably distressed compared to their neighbors
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How to find distressed properties on Zillow
You can find distressed property on Zillow by typing in the zip code or city name for the area you want to buy in, then selecting âFiltersâ and âPre-Market.â This will pull up a list of pre-foreclosure and foreclosures listed on Zillow. You can also go to the Zillow Foreclosure Center and search for pre-foreclosures, foreclosures, and bank-owned properties by zip code.
Keep in mind that âpre-foreclosureâ means the bank or lender has sent a default notice to the homeowners but the homes arenât technically for sale. The owners could be trying to pay off their debts. Or they could be hoping for a cashoffer from a buyer, which would prevent a foreclosure.
But not every distressed property is in the process of foreclosure. You might also want to search Zillowâs main site and look for keywords that signal a property may be distressed. Look for the following words or phrases in the title or listing description:
- Motivated seller
Other websites for distressed properties
Several websites are devoted solely to listing foreclosures and short sales. Not every site is updated regularlyâespecially auction pages. Start with the most reputable websites for distressed properties:
Advantages Of Distressed Properties
The extremely low price of distressed properties is the main interest of home buyers and house-flippers. Sellers are desperate to sell distressed homes. Usually, these sellers want to avoid spending the money to repair a property to bring it to a higher price. As a result, the prices will always be below market value. Distressed homes are an excellent option for those who are investing in real estate for the first time. Be sure to consult a Realtor with experience in distressed properties. They can help guide you through the purchase and repair process to eventually increase your homes value.
Take a look at some of distressed properties most attractive aspects:
Lower than market value cost
Fix and flip opportunities
Easier financing options through bank owned homes
Opportunity to buy in a nicer neighborhood than you could normally afford
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What Makes A Property Distressed
A distressed property is real estate that the owner has been unable to maintain or pay the mortgage on. Distressed homes may be in a pre-foreclosure status, currently in the process of being foreclosed on, owned by a bank or government agency, or simply be property in bad condition.
Property can also become distressed if renovations are halted in mid-stream due to lack of financing, or if a deal unexpectedly falls through and an owner needs to sell fast.
Distressed properties generally fall into one or more of the following categories:
- Short sale with the risk of falling into foreclosure
- Already in the foreclosure process
- Bank owned or REO property
- Have unpaid property tax liens
- Badly in need of repairs, updating, or renovation
Set A Budget & Stick To It
Take a hard look at your finances and figure out how much you can safely spend on your investments. Then use that number to set a budget, and stick to it no matter what. Even if you discover an investment opportunity thatâs hard to resist, rememberthat overextending yourself can lead to real financial pain.
Fixer Upper Homes Are Golden Opportunities
The best thing about fixer upper homes is how easy it is to make them livable again. Fixer uppers are a bargain because most repairs never require the services of an expert, and the low cost of repairs is easy to fund. But sellers know that they have to drop the price substantially because most home buyers don’t want the hassle of repairs. That’s why these homes are selling at a big discount. When buying distressed properties, you may want the advice of a professional consultant for structural damage. But most repairs are simple and easy, like repainting or re-carpeting. Do it yourself and save big money on our exclusive listings of fixer upper homes for sale.
Find distressed properties for sale and all kinds of cheap fixer upper homes & handyman specials in our huge database. Over 1.5 million distressed homes available!
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How Can I Find Distressed Properties
If youre a real estate investor, distressed properties can be a great investment opportunity. Not only will you purchase the property at a more attractive price point, but theres usually less competition for these types of homes. If youre interested in exploring this option, here are a couple of ways you can find distressed properties that are available to purchase.
- Real Estate Agents: The easiest way to find distressed homes is by working with a real estate agent specializing in these properties. The right real estate agent will be able to guide you through the process of finding distressed properties. They may have more information about the home’s condition and any risks you should be aware of. You can also ask them for recommendations on financing options.
- Do-It-Yourself:However, you dont have to work with a real estate agent to purchase a distressed property. If you have some experience in this area, you can do the legwork yourself. To get started, identify a few different neighborhoods youre interested in. From there, you can begin looking for homes that have fallen into disrepair. Then you can research the homeowners and find out if there is a potential buying opportunity.