Distressed Real Estate- good, bad and ugly homes!

Buying distressed real estate is NOT for the financially immature and usually is not a good strategy for first-time homebuyers. Why? Because most of the properties are in need of repair and some require extensive renovations, which is usually in direct conflict with the low downpayment mortgages being offered and insured by FHA. The lenders offering this type of financing are particular about property condition and most sellers in this position will not or cannot afford to make needed concessions needed to complete the transaction.

The ideal buyer in the distressed real estate market is the investor, with means or access to home building and remodeling skills, and who plans to hold the property at least 5 years.
Contrary to what the media may be reporting, it is very difficult, if not impossible to "flip" property in this market.

If first-time homebuyers are determined to buy into the distressed market, it's preferable that they are pre-approved for conventional financing with a hefty downpayment and money in reserve that can be used to refurbish the home.

Most, if not all, distressed property is listed "as-is with right to inspect". From a professional standpoint, planning to purchase a home inspection should be priority upon acceptance of a purchase offer. Normally, a buyer will have a 10-day period to have the inspection performed, review issues and problems, and, based on the report, may decide to walk away from the contract. BE CAREFUL! A buyer only has a specified number of days to cancel a contract based on the inspection results without losing the earnest money deposit.
With the inspection results in hand, it is often easier to obtain estimates from various contractors and determine the true cost of necessary repairs.

This entry completes my coverage of the biggest pitfalls associated with buying distressed real estate. There are too many other issues that can arise, and it's always advisable that a buyer have a team of experts to help navigate this strategy of buying real estate "for fun and profit"!
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Check out this week's FORECLOSURE LISTS on my website- 60 homes ranging from $39,900-$989,000!
Just visit my website and click on the FORECLOSURES page.
www.mypinellasparadise.com
Have a great week!