Let me first describe what a distressed sale is; it’s either a bank owned property or a home that’s being sold as a short sale, “where a lender allows the home to be sold for less than what is owed”.
For the most part a distressed sale is a good value; they say a short sale on average will sell 20% under fair market value and a bank owned will sell 40% under fair market value. Most of these homes need work and in some situations just a cleaning, painting and new flooring will add immediate value and put you into a strong equity position. When will you find that one of these properties will not be a good value; first a home that will have unforeseen problems such as mold or structural defects that you can not see. Another situation would be when there are multiple bidders on a home you will be forced to pay more than you initially thought.
More often than not these distressed homes will be a great value, please go into each home with your eyes wide open and also keep a very close eye on like homes that have sold recently that you can help use in order to determine the home’s value. I hope this was a knowledgeable blog and if you have any questions or a topic you want covered please respond back to me.
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