Distressed Real Estate
There seems to be some great bargains in the housing market at the moment as a consequence of the sub prime melt down and the high jobless rate which in turn have caused so many home foreclosures, distressed real estate is available in large quantities. Bank owned homes dominate the MLS listings and are driving down home prices in most neighborhoods. However before you set out to nab a great bargain there are some things you should be aware of regarding distressed real estate.
Distressed Real Estate-Foreclosures
The first thing everyone thinks when distressed real estateis mentioned is foreclosures. There are two types of foreclosure laws within the USA, namely judicial and non judicial. In non judicial states there is no legal proceedings relating to the foreclosure with the exception of the service member relief act which is to protect the homes of service members on active duty overseas. If you are considering persuing distressed real estate in the foreclosure field you should find out what process your State uses.
So within non judicial States such as Massachusetts, California and Texas when the home owner falls behind on their mortgage payments the bank merely places some advertisements in the newspaper and holds an auction. Before bidding at a foreclosure auction in a non judicial state you should be aware that if you are the winning bidder you will receive a clear title after approx 30 days.
Remember that if you by distressed real estate in the form of a foreclosure you might also receive a home with the old owner still intact and it will be your responsibility to remove them from the house.
Distressed Real Estate-Bank Owned Homes
Because in most cases it will not be possible to view the inside of a piece of distressed real estate before the foreclosure auction, coupled with the fact the you will most certainly inherit the foreclosed owner as a tenant most homes in non judicial States are not bid on and are therefore purchased by the foreclosing lender at the auction. These homes become what is known as REO’s or real estate owned which is a banking term for bank owned homes.
If you are considering making an offer on a piece of distressed real estate that is bank owned, your offer should stipulate that the offer is contingent on a walk through on the morning of the closing and that any changes in condition will negate the contract to purchase.
Bank owned homes are invariably vacant distressed real estate and are routinely left unlocked by careless Realtors and are prone to vandalism especially the theft of copper piping. They are also very prone to pipe freeze and subsequent water damage in cold States.
Distressed Real Estate-Getting a Great Home Bargain
Very little has changed in real estate over the years with the exception of prices. The best deals are always in good neighborhoods with good school systems. However there are likely to be less distressed homes in these neighborhoods o it will be more difficult to locate a bargain.
The best advice is to find a local real estate agent who has been working the area of your choice for many years. Don’t tie yourself to an agent who proudly proclaims to cover the whole state, great real estate agents focus on an area of expertise and know it inside out.
So if a quality home that is distressed real estate becomes available at a knockdown price the agent who specializes in the area will know about it first. In most cases distressed real estate in the form of a quality homes are under agreement before agents unfamiliar with the area even become aware that they where on the market.