Is a distressed property the right deal for you?

With the first-time homebuyer tax credit deadline having come and gone, you may be asking yourself, “What now?” Fortunately, the door is now open to a new wave of savings: distressed properties.

How distressed did you say it was?

For many buyers, the term foreclosure brings up images of run-down homes with no heat and rotting wood. While this is still the case for some homes, it’s no longer the standard. In fact, first time buyers are snatching up distressed deals in decent condition for great prices. 

Better than you thought? This is a foreclosure listing we recently sold in Ivins - pretty darn nice.

According to a November 2009 Keller Williams Research Buying Distressed Properties Survey, 40 percent of all buyers for bank-owned foreclosures (REOs) were first-time buyers in 2009. 50 percent of all short sale buyers were first-time buyers.

Did you hear that!?! See, most first-time or inexperience Buyers automatically think, "I can't buy a foreclosure, I don't know what I'm doing." YES, you can with the help of a good agent. And the statistics above prove that many new Buyers are doing just that.

By definition, a distressed property is one that was purchased with a loan and the homeowner is no longer able to make their mortgage payment resulting in foreclosure – or if they’re lucky a short sale – meaning they owe more on the home than it’s currently worth. With a 20 percent increase in foreclosures from 2009, distressed properties still remain a large portion of home sales and are going to continue well into 2010 as homeowners continue to feel the effects of an economy on the mend.

If you’re in the St. George Real Estate market for a home and are prepared for a unique transaction, a distressed property can be a great option. Here’s why:

Prices are low – Buying a foreclosed property is an excellent way to get a home for less. Research shows you can save 10-40* percent over the price of similar properties in a traditional sale. (I put the asterisk in because we have to define "savings" in the correct method, but that's something we can do another time.)

Mortgage costs are low – With rates hovering near historic lows, financing costs to are favorable. Keep in mind, rates are always changing. It’s important to begin the pre-approval process so that you know how much you can realistically afford.

You have options – The number of homes in some stage of the foreclosure process still remains high. RealtyTrac, a site dedicated to tracking foreclosures across the country, estimates that there are approximately 2.1 million homes in some stage of foreclosure in the United States.

Sellers and lenders are motivated* – According to data from RealtyTrac, in April, one in every 387 households in the country has received a foreclosure filing. The bottom line is that many sellers are still feeling the pain of a down economy and are anxious to out get from under a home that is putting stress on their current financial frustrations. While it is still an emotional transaction, these sellers are willing to come down on price or even consider concessions such as helping out on closing costs. (Again, the asterisk - we also have to define "motivated" and how that shows up in the market.)

Banks holding on to large portfolios of Real Estate Owned (REO) properties want to unload quickly – and price these home to sell.

Your best ally when purchasing a distressed property is an expert. Is that me? Well I guess you will have to make that determination on your own, but for what it's worth, I was delivering pizza and newspapers to most of these foreclosure-stricken areas before most agents had even heard of St. George....just sayin'.

Regardless of the agent you ask to assist you, I wouldn't even think about going that road with out an agent who has serious experience in that area. ESPECIALLY because it won't cost you any more than going solo.

Distressed properties are not the only great play in the St. George Real Estate Market, but they certainly can be one of the best.

Email me any questions you have previously felt too stupid to ask! larkin@gostgeorge.com And remember: There are no stupid questions, just stupid people!

Just kidding....kind of.