Buying Property "Sold As Is"

The real estate market has been flooded with more foreclosures and short sales than we have ever seen before. Its true that distressed sales only account for a third of properties on the market, but with all the media attention one would expect those numbers to be higher. The media especially exaggerates the super deals that can be gotten by purchasing distressed properties. It is true that there are excellent deals out there, but when you consider that distressed sells are "sold as is," is it really a deal or a hassle?

Buyers need to strongly consider these 4 things when determining if a distressed property is worth the money:

1. Sellers of distressed properties will not make any repairs to the property and they require that buyers sign disclosures that correspond. If the buyer is obtaining a government loan or participating in a community program of some type, a distressed property may not be a good option. Most special programs require certain repairs to be done. If this is the case, then under certain circumstances, the buyer will have the option to place funds in escrow for repairs to be completed after closing. The buyer has to determine if the negotiated sales price + the amount of required repairs + additional cosmetic repairs needed still equal a deal.

2. 85% of distressed properties on the market will require some cosmetic improvement. Buyers should prepare to spend $6,000 - $15,000 on cosmetic improvements. If a buyer can do most of the work him/herself, then that number is reduced $2,000 - $10,000. If a buyer does not want to put a little sweat equity in the property, then purchasing a distressed sale will probably be lustrating.

3. Distressed properties allow buyers to live in neighborhood they could not afford in a normal market. What buyer wouldn't love to live in a community that seemed to be out of their league just 2 years ago? A few weeks ago I showed a property on the water that appraised for 1.9 million in 2007. The list price was $359k. Folks, talking about instant equity! You do the math. I believe and have been told by many experts that the market is sure to rebound to its previous state. Deals like that are not a dime a dozen and they sell within a few hours.

4. When placing offers on short sale properties, patience is the key. Most short sales in progress take a minum of 2 weeks to receive lender approval. If a buyer has to move by a certain date, then playing the waiting game with the sellers lender could prove to be lustrating and thus not worth the overall benefit.

This is not an exhaustive list, however key considerations when deciding if you want to purchase a distressed property; sold as is. If you are looking for distressed properties, go to www.charlottemetroreo.com to request your free list. New distressed property listings will be emailed to you as they come available.