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Competing with Other Buyers of Distressed Properties

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By : Joseph B. Smith    99 or more times read
More and more homebuyers are favoring distressed properties, not just because of their low prices, but also because the selection has become so vast that you can find almost all types of dwellings in this market niche.

And it is not just individual homebuyers who are interested in distressed homes, but investors too, with most of them equipped with enough cash to close the deal without any hassle. If you are on the lookout for distressed houses, here are some tips on how to gain advantage over others who are also looking for the same.

Get the information early

You can use online listings or printed material listings of distressed homes for sale, but others will also be looking so you need to exert more effort. The best way to get information about these properties ahead of other buyers is to use your contacts, most of which can be found right in your immediate environment.

Ask neighbors, friends, relatives, parents at the PTA and just about anyone whether they knew of any distressed houses for sale and check them out whenever you can. You need to also check your local municipality as these properties are often part of public records.

Prepare your finances

If you have the means to pay in cash, the better. However, if you are going to rely on a loan to finance your purchase, make sure that you have one ready. This, of course, would mean that you have taken care of your credit standing. If not, start with that. Pay as much of your debts as you can to improve your credit score and to also improve your chances of securing a loan.

Even though you are quite sure that you will have no trouble getting financing due to your positive credit record, you still need to prepare some cash for your down payment. Shore up your cash pile as much as you can since the higher the down payment you will be willing to pay, the better your chances of securing the deal.

Understand the seller's motivation

In the case of distressed properties, the bigger competition may not be from your fellow independent homebuyers but from investors who have the means to purchase properties in cash. If you are up against several investors who are laden with cash, you may have to walk away and seek another option.

However, take note also that there are sellers who prefer buyers who wish to purchase their properties and use them as residences. Sometimes, the reason may be an emotional one. Some sellers would like to believe that their home will pass on to another family who will consider the property their own home. In cases when the distressed homes are owned by the bank, the decision to favor families or buyers looking for a residence may be tied up with the desire to improve the condition of the neighborhood or the community. After all, banks will also benefit if the neighborhood is rid of distressed properties and have more families and potential consumers living in it. Find cheap houses for sale here!

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