Reasons why property ends up with distressed sellers

If you are a home buyer or a real estate investor who is on the hunt for a property at a bargain, a distressed property will definitely be an attractive option. Many people assume that a distressed property is one that is in a bad condition but the word distressed does not necessary refer to the property’s condition. A distressed property is one that is being sold for way less that its market value.

Why do sellers end up with distressed properties?

The main reason why sellers end up with distressed property is because they are foreclosing on their mortgage. The sellers either cannot or are no longer willing to continue making their mortgage payments. There are however other reasons why sellers might end up with distressed property. In fact, any seller that is motivated to sell their property below its market value due to one reason or the other is considered a distressed seller.

Below are some other reasons why sellers might end up with distressed properties:

 

	Divorce Couples getting divorced are motivated to have the property sold quickly for financial and emotional reasons and are willing to sell it below its market value to sell it quickly.		Death A death can definitely change things if a house is owned by two persons and one passes away. The remaining person in most cases is not able to fulfill the mortgage commitment and will be forced to sell it quickly.
	Financial Financial reasons are often the main reasons why many sellers end up with distressed properties whether it is a job loss, medical condition, a pay cut or some other financial drain and as a result, the seller is motivated to sell quickly.		Relocation Owners who are relocating to another city of country are also motivated to sell their property very fast and will be willing to accept less.

 

How to find distressed sellers?

The best way of finding distressed sellers is to know how to identify distressed properties. Once you have identified distressed properties, you can then contact the sellers and start negotiating. Here are a few ways that distressed properties can be identified.

In addition to identifying distressed properties, you can also look for a targeted list of property owners which is public knowledge. You can then personally contact these sellers. Personal contact is better than other methods of establishing contact such as direct mailing or email. If you do use direct mail or email, you need to make a very compelling case as that is the only way that you will be getting motivated sellers to call you.

What are the risks of buying distressed sellers?

There are indeed risks of buying distressed property but if you consider these risks when purchasing a distressed property, you should have no issue. One of the main risks is that there will most likely be repairs that you will have to make and the costs of these repairs will be yours as the buyers. Many banks do not fund the costs of repairs. In fact, getting financing to buy a distressed property can be difficult so if you eventually get the funds from the bank to buy the property make sure that you have some savings that you will be using for the repairs.

On the other hand, although there are risks involved with buying distressed properties, there are many advantages. You can end up buying a very expensive in a very good condition for less than fifty percent of its market value. As a real estate investor, you can invest in the repairs and then sell the property back for its actual market value, making a very nice profit on it.

Where to buy a distressed property easily?

If you want to buy a distressed property easily, you should consider house auctions. Auctions have been very effective in the sale of distressed property. In fact, auctions are helping to move the market of distressed property. If you attend one of these auctions, you will be sure to find a nice property at a price that might be less that you had anticipated to pay so if you want to buy a distressed property in a quick and efficient manner, attend house auctions.

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