Distressed properties aren’t always bargains. There is, however, the potential to discover a great deal among them. Typically, a property becomes distressed because the owner faces financial devastation, and there is no other recourse than to sell. Of course, if a home has fallen into a state of serious disrepair, this too is a distressed property.
It’s best to go into this type of real estate transaction with realistic expectations as an investor and understand the process involved in locating these properties in Richmond and the time and the costs involved in buying distressed properties. There are five things to know about buying distressed properties in Richmond.
Real estate agents drive for dollars, going street to street, and looking for properties with signs of neglect, for sale by owner signs, or even signs of abandonment, such as piled newspapers or broken windows. One of the significant side effects for you as a real estate investor in Richmond is becoming intimately familiar with the market, noting any changes on your regular tours. By building these drives into your routine, you’ll be able to make the first move when you locate an off-market deal—tracking down the owner for yourself and making an offer, which may just put you ahead of the crowd when purchasing distressed properties in Richmond.
You must become acquainted with the processes of probate investing before buying these particular distressed properties in Richmond. As public records, the county courthouse will provide the information you need to locate these homes, and some companies offer this list for a fee if you prefer to order them online. When a will is in place, the process is relatively straightforward. An average of 63% of Americans haven’t made out a will before they die, known as being intestate, the sale is through the probate court, and it can be a very long process. Often, the heirs have no interest in prepping the property to be sold or improving the property and don’t want to wait years for their check from the sale, which gives you an advantage. Just remember, not all probate sales are bargains, so you must have realistic expectations.
Borrowers in distress can reach out to their mortgage lender before the bank begins foreclosure, proving their hardship, thereby gaining permission to sell the home for less than the amount remaining on the mortgage loan, known as a short sale. As these homes are typically in better condition, investors face competition along with unsteady outcomes. You should note that these properties aren’t necessarily always bargains. However, there are good deals to be found among short sales for investors. The lender will typically only allow a slight discount of up to ten percent below appraisal, which is very important to know. You should be aware that buying distressed properties in Richmond that are short sales involve a lengthy process that includes much red tape and paperwork. You’ll find information on short sale properties at the courthouse and online and by networking with other like-minded real estate investors.
Foreclosures hold the potential for high returns and are another type of investment to know about when you’re buying distressed properties in Richmond. Typically enacted when a borrower defaults on their mortgage, a bank takes possession, known as foreclosing. Foreclosed properties are commonly sold at auction and are sold as-is, with no walk-through. Financing for these properties can be challenging to attain, so cash buyers have an advantage; just be aware investors must pay your downpayment on the home with your bid. Properties left unsold at these auctions are known as real estate owned, REO, or bank-owned. These sales are under much less pressure with less competition, financing may be easier to attain, and you can inspect the property before buying. These sales, too, are a matter of public record and are published in the newspaper. You may seek out a real estate professional that specializes in foreclosures, as well as several online sites which offer foreclosure listings.
When property owners cannot pay their taxes to the county, the homes are foreclosed on and sold to the highest bidder at auction to satisfy the debt. Should another lienholder hold a claim on the property that is superior or of a higher priority, you could lose your investment. Additionally, if another lienholder wishes to redeem their claim on the property for which you hold the tax lien, they must pay what you bought the tax lien for plus an added set amount. Remember, too, the owner typically has 12 months to pay the tax lien while your funds are sitting, which is critical to know about buying distressed properties in Richmond.