Types of Distressed Properties:
There are several types of distressed properties in South Jersey. We will break the list down to the most common three types of listings, which include Short Sales, Foreclosures and HUD properties. Each of these types of distressed sales in South Jersey offer something different for the potential buyer on investor considering the purchase.
Short Sales or Pre-Foreclosures
Short Sales and Pre-Foreclosures mean the same thing. As a South Jersey buyer, you will see these homes listed under these two headlines. Short sales are basically listings that are entering the pre-foreclosure process. These homes are listed in the MLS and have the homeowner as well as the bank involved.
With a short sale, there are many factors that are involved, and each bank handles each contract differently. There are a few factors that will affect if your offer is accepted, and how quickly you can settle, or close on the home. Some of these factors include:
- The bank, asset management company, homeowner and realtors you are working with
- Your offer price, financing terms and compared to other offers submitted (if this is a multiple offer scenario)
- The number of mortgages, liens, and unpaid taxes or condo fees that the distressed seller is dealing with
Foreclosures, Bank Owned and REO (Real Estate Owned) properties all mean the same thing as well. As a South Jersey buyer, you will also see these homes listed under these types of headings. Foreclosure listings are basically the listings that have already gone through the pre-foreclosure process. These homes are listed in the MLS and have only the bank or asset manager involved. At this point, the homeowner is not part of the transaction.
These types of listings are priced extremely competitive for the most part. They are in “as is” condition, and typically will sell fast, and with multiple offers submitted. These types of properties are best for advanced investors. The bank wants to know that the person buying the property has the funds to do so, and they prefer cash offers. In addition, these properties normally need a lot of work. The buyer or investor purchasing this type of listing should be well versed in the cost of repairs, the process of inspections and certifications needs, and have the extra funds set aside to handle the unexpected costs that may arise after the home has been purchased and repairs have begun.
Of course, in South Jersey, many people are looking to get into the business of real estate investing, and there are tons of resources, mentors and talented realtors that can help you in getting started.
HUD listings are government owned properties. These homes become available when someone with a HUD insured mortgage can no longer make the payments. The typical inventory of HUD homes is generated from once first time home buyers in South Jersey. The HUD list is updated every Friday afternoon with new inventory. When the home becomes available for sale, first, owner occupied, otherwise known as an owner who is willing to live in the property and make it their primary residence, are considered first. Offers are submitted, and HUD will determine what is the highest and best offer for them.
If there are no offers submitted that are owner occupied, then the property is extended to investors. At this point, HUD will consider allowing a purchase to an investor who plans to purchase the property with the intention of fixing and reselling (flipping) or fixing and renting to a tenant. While HUD prefers to sell these homes to owner occupied buyers, they need to sell these properties quickly and at market value, so an investor is not necessarily out of the question.
Similar to foreclosure listings, these properties will need a lot of work and can close reasonably quickly, 45-60 days. Unlike foreclosure listings, HUD offers owner occupied buyers the ability to do a 203K or Streamline K loan. These are construction loans that allow a first time home buyer or owner occupant the ability to purchase a home that needs work with the ability to have a line of credit for those repairs that need to be made.
If you are considering purchasing a HUD property, it is imperative that you are speaking with a mortgage lender who specializes in 203K and Streamline K loans.
If you are ready to get started in finding your South Jersey investment property, please submit your information below:
Someone will contact you in 24 hours from the Short Sale South Jersey Specialist Team and all information is protected and confidential.