A “Distressed” property is the industry term encompassing foreclosures, bank owned (REO) and short sales. Many people think that going after foreclosures, bank-owned or short-sale properties is a good way of getting a great deal on a home. It can be. But it can also be a risky purchase, and tough to even buy one, especially when financing.
Foreclosures
Foreclosed homes are bank-owned properties that are usually sold at auction, where the bank tries to sell it for as much as possible to recover the money it lent.
Purchasing a foreclosure before it hits the open market (at an auction or Sheriff sale) requires that you take on all risk — they are sold “as is,” meaning no inspections, and no repairs. Oftentimes you can’t even see inside the home before you make an offer. And since most lenders won’t fund the purchase of foreclosed homes, purchasing with all cash is usually your only option.Continue Reading