Are Portland distressed properties on the upswing? The current data, provided by RMLS and shown on the right, shows that the final quarter of 2014 revealed an increase in distressed homes – markedly in Bank Owned/REO properties. In September 2013, we wrote a blog about a downshift in Portland distressed properties which showed a considerably lower distressed rate of 7%. What does this mean for our market?
Because distressed listings typically sell for 15-20% below market value, this can mean considerable savings for buyers who might be interested – although not everyone will be. Before homebuyers begin rejoicing at such savings, it is important to know what these properties mean for a homebuyer. After all, this option isn’t for everyone.
Distressed properties are those that are being sold because of negative financial situations. Short sales are properties being sold for an amount less than what is owed by the current owners and Bank Owned/REO are those that have been foreclosed on. The savings that stem from reduced asking prices is enticing to many. However, this doesn’t mean that these properties are always the best deal.
Here are the three things you need to know before you start looking at distressed properties:
1. The “distress” in Portland distressed properties isn’t just about the previous owner’s financial situation.
Many of these homes have serious damages and repairs that need to be made. You’re not likely to find a gaping hole like this one, but there are, more than likely, a significant amount of repairs that will be needed. Some of these may be visible, but others may not be. You will want to make sure you know what repairs are needed before you close.
2. Inspections will be key.
Banks by law are not required to make any disclosures regarding the condition of the property. Other properties require full disclosure, but banks are not held to the same accountability because they may not have current information. This means getting reliable information about a foreclosed property’s physical condition can be challenging, which translates into an added risk for the buyer. Because of this, you will need to make sure to get inspections done on the property so that you are well-informed on the true condition of the property.
3. You’ll be in charge of all repairs.
In a traditional real estate transaction, there can be some negotiation on repairs after an offer is accepted (during the inspection period). Will the seller pay for repairs? Maybe. Will the seller reduce the price with the contingency that the buyer will make the repairs? Perhaps. However, in a distressed property situation, the home is offered on an “as is” basis. Hiring a contractor to make the repairs can significantly add to the cost of the home, so if you’re considering purchasing, work with a trusted contractor (we can recommend some that our clients have used in the past) who can look at the property and give you an estimate.
For buyers still interested in distressed property, the increased percentage of available Portland distressed properties is great news. Even better news? We can assist you in the home buying process. Our team can help you find the properties you want as well as put you in contact with trusted contractors to help you estimate and then make necessary repairs.
Give us a call at 503-406-5232 when you’re ready to check out the current inventory!
*One of the images on this post came from freedigitalphotos.net/phasinphoto.