Let’s face it: the Dallas real estate market is riddled with distressed properties. However unfortunate this is, the fact of the matter is, as a buyer, you may in a position to purchase a distressed property. Most distressed properties are labeled as such because they are either in foreclosure or are being sold as short sales. Short sales are different from foreclosures, as they involve homeowners who have made an agreement with the bank to sell the property for less than the balance of the mortgage, due to their inability to remain current on their mortgage.
You’ve no doubt heard that distressed properties are where the deals are. Although this may be true, don’t expect a “steal,” as most banks are interested in getting as much money out of the property as possible. Is it possible to get a great deal on a distressed property? Absolutely. Can you expect to walk away with the deal of a lifetime? Don’t count on it.
If you are interested in purchasing a distressed property, there are a number of things you should consider. First, expect more paperwork and processing time. Many short sales and foreclosures can take much, much longer to complete, thereby discouraging many potential home buyers. If you find a great property that is either in foreclosure or being marketed as a short sale, you will need to become knowledgeable about Dallas real estate and its distressed properties market:
• The seller will likely be highly motivated to sell the property. Banks are interested in selling a foreclosed property to get it off their books, while a homeowner is likely extremely interested in ridding themselves of a mortgage they can no longer afford.
• Many homes in foreclosure can go for a fraction of what they would have just a few years ago. However, in these cases it is common to become involved in bidding wars with other buyers, so be aware that you may not be the only interested party.
• Unless you are highly skilled in the foreclosure and short sale Dallas real estate market, find yourself a qualified real estate agent to help with your distressed property purchase. A qualified, experienced real estate agent will have the knowledge and the tools necessary to help you throughout the entire process.
• With more buyers entering the Dallas real estate market as of late, thanks to low interest rates and the first-time homebuyer tax credit, the selection of distressed properties in the Dallas region may be smaller than you think.
• The transaction process may be incredibly confusing and frustrating for many home buyers. Unlike traditional real estate purchases, distressed properties may come with their share of legal and financial hurdles.
• Distressed properties – in particular, foreclosures – may be in terrible condition, either from neglect or intentional damage. In fact, some foreclosures may have been literally stripped by the previous homeowner, either out of financial desperation or sheer malice. Either way, don’t expect a foreclosure to be in mint condition.