Granted there are some great investment deals in the distressed property market. Here are ten rules that may assist in the process.
1. Have the money before you shop. Most owners of distressed properties cannot or will
not accept contracts with a mortgage contingency clause. Having the loan in advance
gives the buyer an advantage in negotiating.
2. Be mentally prepared for delays, aggravations, and red tape. Buying a distressed
property could be your worse real estate transaction ever. However, it could also be the
best investment you ever made.
3. No contingencies. This will usually cause the offer to be rejected.
4. Flexibility as to the condition of the property. This is necessary as there could be
components that need to be replaced, repaired or that are inoperable. Understand that
with foreclosures and REOs there are no disclaimers regarding the property or the
5. Be prepared to make an offer. The best chance of getting what you want and how you
want it is when you are not competing with another offer. When you see it – BUY IT!
6. Motivations rule the day. These need to be verbalized and evaluated. The motivation
of finding the perfect home, at the lowest price with no hassles is all but impossible
when it come to distressed property purchases.
7. Buying at the bottom of the market. The bottom of the market is not determined until
months after it hits the bottom. This is not a realistic goal.
8. Quick settlement. Many if not most distressed property sellers demand a quick
settlement as they want to be relieved of the financial burden. A quick settlement is one
that take place within 30-days from the acceptance of the offer.
9. Inspections. It is recommended that any buyer of distressed property seek the advice of
a competent home inspector to determine repairs that need to be made and the
10. Examination of title. A title search by a competent attorney would be advisable to any
client buying a distressed property