So you want to purchase a distressed property? While you might find a smoking deal, you may also wind up with a splitting headache.
The conditions of distressed properties can vary significantly. Some people have taken care of their properties while others were unable to afford repairs and maintence. Some properties have been vandalized or fallen into disrepair during vacancy. Understand that most distressed properties are sold As-Is, meaning that repairs will not be negotiable. Make sure your cash on hand or loan product will cover anticipated repairs if they are needed.
REO’s, which are lender-owned properties, are fairly straightforward transactions because you only have to deal with one party (the lender). Because of their appeal and value, you might find that multiple offers have been received on an REO. In that case, the lender may request highest and best offers or choose to negotiate with the top offers and reject the rest.
Short Sales, on the other hand, have to be approved by a third party. You will need to have the owner accept the offer and the lender approve the price. Pre-approved transactions tend to move faster, but the biggest complaint with short sales is the amount of time it takes to get an approval after an offer has been submitted. If you need to move into a home within 90 days, a short sale may not be for you.
So… REO or Short Sale? Either one could be a nice deal, and with a little patience and perseverance you might just avoid that headache.
Kendra Wilson is a Broker, REALTOR®, and Certified Investor Agent Specialist with Century 21 All Seasons in Asheville NC.