What Are The Risks Of Buying Distressed Homes?
There are many potential benefits to buying a distressed property, but these purchases can be risky. If you’re a first-time home buyer, you should consider whether the risks are worth the potential rewards.
The house may seem like an incredible bargain. But you need to consider whether you’re ready to handle the potential delays, disappointment and expensive repairs that often come with distressed properties.
Here are a few of the most significant risks that come with buying a distressed home.
Buying A Property As Is
The biggest risk of buying a distressed property is that the home is usually sold as is. It’s hard to inspect distressed properties before the sale, particularly if they’re sold at auction.
Even if you do get the opportunity to explore the property, the seller often has a limited budget. They might not have room to negotiate any home repairs.
Getting Outbid At Auction
When you buy a home at auction, you can typically attend online or in person. Online auctions are becoming increasingly commonplace.
But regardless of which path you choose to take, there’s always the possibility that you could be outbid at auction. There’s no guarantee you’ll be able to purchase the property until the sale has been finalized.
Purchasing Delays
If you’ve never bought a distressed property before, you may be surprised by how long the process usually takes. The sale is not as straightforward as buying a home from someone who’s currently on their mortgage.
While it can take an average of 6 – 8 weeks to close on a traditional home, it can take 6 months to a year to close on a distressed property. That’s because you’re usually dealing with the lender, and they have to approach the closing process on a distressed property very carefully. Plus, there may be some hoops you have to jump through before finalizing the sale.
