With one-third of all home sales classified as “distressed” by the National Association of Realtors, you’d think the few buying homes in the down market would be in for some exceptional deals.
True, prices are down, but buying a distressed home is no cake-walk.
WSJ: Those numbers aren’t making it any easier to buy distressed property. Bidding wars are erupting for the lowest-priced foreclosures. Experienced investors with cash are elbowing aside first-time buyers who need mortgages. And banks generally sell property “as is,” without the defect disclosures required of other owners. Short-sale buyers, for their part, often face delays of weeks or months as they wait to hear back from lenders—and from the institutional investors who bought securities based on the mortgages.
Worse, the extra costs of distress can negate the low sale price.
Distressed-property buyers also often have to cope with the fallout from the ruined lives of previous owners, such as vandalised properties and liens from second mortgages, taxes, unpaid water bills, homeowner-association dues and court judgments. For all that, final sale prices often aren’t significantly lower than average in some areas, because the foreclosure glut has also driven down prices for sellers who aren’t in default.
So much for THAT get-rich-quick scheme.