What Does “Distressed Property” Mean?
Owning a home is a significant responsibility, and there will always be factors outside of your control. The financial burdens associated with owning a home can become overwhelming to families if they encounter other financial emergencies. Most sellers become stressed when they learn that this may mean they own a distressed property but don’t understand the meaning behind it.
When it’s time to move, you might find that your home is considered distressed because of your financial circumstances and the timeline on which you need to sell. A distressed home generally sells for less than market value.
It’s important to thoroughly understand the meaning behind a distressed property as a homeowner. This will help you weigh your options better when it comes time to sell.
The Basic Definiton
The meaning behind distressed property often refers exclusively to financial problems. However, it’s common for distressed properties also to have physical problems.
Distressed properties are common in areas where the economy isn’t doing well. They can also occur in other situations where the owners have fallen behind on payments and are struggling to sell.
Underwater Homes
Underwater homes are a special kind of distressed property because the home itself is often in good condition. Situations like this occur when the remaining mortgage is more than the property is worth. This usually isn’t due to neglect.
This sometimes happens if there is a dramatic drop in property value due to environmental factors. It may also happen if the homeowner hasn’t been making payments on time and has foreclosure looming.
Underwater homes are often sold in short sales, which is when someone buys them for less than what the mortgage is worth. After that, the house may be re-sold to new occupants.
Legal Ramifications
A mortgage is a legal contract between you and the mortgage company/bank that helps fund the purchase of your home. If you fail to hold up your end of the agreement, they have the right to take your home. They will do so after filing legal paperwork and giving you notice of foreclosure.
However, the goal for banks and mortgage companies is simply to make their money back. If the foreclosure hasn’t happened yet, you can still try to sell the home. The new buyer must be fully aware of the financial situation and any existing debts or liens on the property.
This is why there are companies that specialize in the legal intricacies of buying distressed properties. There is usually additional red tape that needs to be cut through before you can finally walk away from a distressed or underwater home. The average buyer won’t have time or knowledge for dealing with the bureaucracy, nor will they have the money necessary to buy the home outright instead of getting a mortgage.
Distressed properties are usually sold as quickly as possible to bail out the owners. This faster sale process means less time for inspections, which means that the property is usually sold as-is without legal recourse for problems discovered later. The buyer will be taking a risk on the purchase, but an experienced distressed property buyer will understand this risk and consider it when making an offer on the home.
Getting Out of the Situation
Distressed properties aren’t hopeless, and in some situations, families manage to turn the situation around and reclaim their homes. However, this is uncommon because of how often other bills and debts pile up at the same time.
Figuring out how to get rid of distressed property as soon as possible can help you avoid catastrophic impacts on your credit score. Since a lower credit score makes it even harder to recover financially after walking away from your home, it’s essential to move quickly before unpaid bills affect your rating.
Many owners of distressed homes move quickly to sell their property with that in mind. Even if the house has sentimental value, it’s not worth the risk to your financial health.
Home Selling Options
The standard option is to try to sell your home on the open market, with a lower price tag on it to entice buyers. However, this reduced price may also make it harder to cover the mortgage if your home is underwater.
Additionally, standard home sale terms require inspections and escape clauses for the buyer to slow down or even cancel a pending sale. This can prolong the challenge of selling the property and getting out of a bad financial situation. Selling a distressed property to a cash buyer who specializes in these types of homes is often the best option.
Who to Trust
Florida’s home-buying market is constantly in flux, with property values changing to account for demand. You need a buyer who understands the market and can give you a fair deal for your home, even if it is damaged in addition to being in distress.
It’s important to vet your distressed property buyer and make sure they’re operating a respected business. Scammers can try to steal your Social Security Number and property information by posing as a cash home buyer. If they can’t point to dozens of satisfied sellers, you should find someone with a better reputation.
Turning to an established cash buyer like Meli allows you to follow an easy step-by-step process for selling your home quickly, without the hassle of multiple showings, negotiations, or handling the paperwork yourself.
Cash Home Buyers in Central Florida
Our team at Meli is proud to serve the Central Florida area and beyond, providing fair offers for distressed homes and usually closing in just 30 days. We know that each distressed property is different, and we treat you with the consideration you deserve.
Our team works hard to cut through red tape and give you the best deal possible. Whether your home is facing foreclosure or has major hurricane damage you can’t repair, call us today at (407) 338-4183 to learn more about how we can help.
Image Credits
https://www.pexels.com/photo/house-lights-turned-on-106399/
https://pixabay.com/photos/office-business-men-businessmen-1209640/
https://pixabay.com/photos/house-keys-key-the-door-castle-1407562/
