When you are buying a home there are three types of properties that need more research and due diligence. These kinds of properties include condemned houses, hoarder homes, and short sales.
It is easy to make mistakes when you don't do your homework. Home buying mistakes could cost you ten's of thousands of dollars and possibly more.
Buying a property is a big investment. It's crucial to do your research before you make an offer. Let's examine each of these types of properties further so you don't end up losing your shirt.
When you want to buy a condemned building, whether it is a house or apartment, there is an additional layer of research needed. The definition of a condemned house is one that has been deemed by the local government to be uninhabitable. There are almost always unsafe conditions.
Condemning a house isn't done without a significant need or reason.
You may have driven by a condemned house and didn't even realize it. They are usually boarded up and have numerous no trespassing signs on the lawn and the buildings.
If a property has been condemned, the local municipality probably won't allow the owner or tenants to occupy until repairs have been made and an inspection completed.
The process of condemning a house and having it pulled down can often mean there is no chance for restoration. That's not always the case. In some circumstances properties can be salvaged. It will depend on the circumstances of what caused the government to condemn it.
You might be wondering why houses get condemned. The most common reasons why properties are condemned is due to a hazardous living condition.
On may occasions these types of properties have been abandoned and their condition has gotten worse over time. The owner for whatever reason is no longer maintaining the property.
Another common reason that a property could be condemned is the exterior condition is affecting the neighbors and possibly the general population. A common example would be a hoarder's house which we will discuss.
The last condition that may impact a condemnation include lack of working utilities including water, electricity, and sanitary systems such as a septic.
Another type of property that requires more home work is a hoarder's house. A hoarder home is one that has been filled to the brim with excessive personal items. Many of these things that have been collected with hold no or little value.
It goes beyond significant clutter. Hoarding can happen in all types of properties from single family homes to condos to apartments.
Hoarding is a serious mental illness that typically cannot be cured without medical intervention.
Those who are afflicted with hoarding find it very difficult to part with anything in their life. Something as common place as a newspaper or a sugar packet is tough to get rid of.
The problem will become so bad that you won't be able to see the rooms in a home anymore. There will be endless amounts of trash and property accumulating.
In many instances, hoarding will lead to social isolation and severe health issues. The home turns into a place of chaos where there is no semblance of normal.
Due to the condition of these properties, home buyers need to pay much better attention to things. The condition on the surface may look better than it really is. Often thousands of dollars need to be spent fixing problems, including sanitizing the property from top to bottom.
Usually hoarder homes and condemned houses are the perfect properties for contractors and companies that specialize in as-is purchases. Investors look for these types of homes because they can purchase them for a fraction of the value. They will fix and flip them for a nice profit.
The last type of property that requires a different level of understanding is a short sale. A short sale is a type of property where the home is sold for less than the mortgage balance owed the lender.
In order for a homeowner to short sale their property, they need to have approval from their lender. Not every homeowner is eligible to do a short sale.
Short sales become more prevalent when real estate markets shift from favoring sellers to buyers. There is often an economic downturn that causes homeowners equity to decrease substantially.
If a homeowner is no longer able to pay their monthly mortgage, they will often fall into arrears. Eventually, when numerous mortgage payments are missed, a lender could look to foreclose on the property.
A short sale can be better for lenders due to the fact that foreclosures are a very costly procedure. A short sale can be an attractive purchase for a buyer because they are often sold slightly below market value.
However, the problem with short sales is the length of time it takes to complete the transaction. They really should be called long sales. Back when short sales were in vogue at the last economic downturn, there were some short sales taking over a year before they were approved by the lender!
Yes, you read that correctly. Most buyers don't want to wait that long to buy a house. When this type of property comes available, you need to make sure it is a property that will be short sale approved. Otherwise, you will be wasting a ton of time and end up empty handed.
Not every home that gets listed for sale is going to work for every buyer, even when the property seems appealing. There are circumstances such as what has been outlined here that may cause some second guesses.
When getting involved with one of these types of properties it can be beneficial to have a real estate professional guiding you. Working with a skilled local real estate agent makes a ton of sense.
If the agent has experience in these types of properties, it will be even more helpful.