What is Distressed Property?
When a property is under foreclosure or sold by the lender, it can be classified as distressed. A homeowner who was unable to keep up with mortgage payments and/or tax bills on their home might end up selling that house below market value because of how far behind they are in paying for what needs to get done at the building itself.
Homeowners often assume that selling a distressed property is time-consuming, difficult and stressful, but it doesn’t have to be!
In fact, distressed property sales can be completed quickly, efficiently and at a fair price. If you’re selling a house and you want to avoid any hassles, check out our top ten tips for selling a distressed property in San Diego…
- Find a Distressed Property Specialist to Help Sell Your San Diego Home
When you sell your home, you may be used to contacting San Diego Realtors and agents. Typically, a realtor will advertise your property for you and invite interested buyers to view the property. However, distressed property sales don’t work in quite the same way.
Generally, there is a smaller market for distressed properties, so advertising them alongside traditional properties don’t always work as well. Of course, this doesn’t mean you can’t use other options to ensure a fast and stress-free sale.
Instead of using a real estate agent, consider working with specialists in distressed property sales. By choosing a company with experience in handling distressed homes, you can speed up the process of selling and secure your capital quickly.
Furthermore, you won’t need to try and ‘upsell’ the property or persuade potential homeowners to make an offer. Firms who routinely buy distressed properties will be familiar with circumstances that can lead to a property being classified as distressed, which can cut the amount of time it will take to sell the home.
- What You Need to Disclose About Your Property
When you’re selling any type of property, it’s important to disclose everything that’s relevant. This gives buyers a fair opportunity to gather information that is relevant to their decision-making process. For example, neighborhood nuisances, structural issues, and potential natural hazards should all be disclosed when selling a property in California.
Even when you’re engaging in distressed property sales, it’s vital that you disclose everything that you’re required to. Although disclosure requirements do vary from state to state, ibuysd.com knows exactly what you’ll need to disclose when you’re selling a house in San Diego, California.
Any property owner who fails to disclose relevant information can face legal action, so it’s in your interest to be as honest and upfront as possible. While there may be a lot to report when you’re selling a distressed property, this doesn’t mean you won’t find a buyer.
Anyone who routinely purchases distressed homes will understand the range of issues that may be present, so full and frank disclosure won’t put them off. In fact, being transparent from the start will give potential buyers confidence and may speed up the sales process.
Two disclosure forms must be filled out when selling your home, the Transfer Disclose Statement (TDS) and the Natural Hazard Disclosure Report/Statement. Below are a few items that must be accurately disclosed on these forms when selling your San Diego home:
- Appliances that come with the home, as well as any issues that could affect the property’s value
- Adequate water heater bracing, functioning smoke and carbon monoxide detectors
- Death on the property in the last three years
- Reports, inspections, disclosures, warranties, maintenance recommendations, or other documents about the condition of the property
- Lead-based paint and lead-based paint hazards
- Water-conserving plumbing fixtures
- Specific hazards for the property and surrounding area including natural hazard zones for fire, flood, earthquakes, and landslides.
- Any liens or mortgages on the property
- If the property is in a planned unit development with a Home Owner’s Association (HOA) and its rules
- Research Property Values
A distressed property won’t have the same value as a pristine home, so it’s important to get a realistic value before you start advertising your property. The cost of necessary repairs generally needs to be factored in when valuing distressed properties, so don’t expect your property to match the value of turnkey homes in the area.
However, getting a range of professional valuations should give you a realistic idea of how much the property is worth.
- Setting the Right Timeframe
When you’re selling any property, you may need to be patient if you want to get top dollar for it. If you’re on a tight deadline, you might want to lower the price slightly to secure a quick sale. Before you start negotiating with potential buyers, decide what’s most important to you.
If you’re not in a rush to sell, you might want to hang on for a buyer who’s willing to pay the asking price. Alternatively, if you want to release capital and sell the property quickly, you may want to consider how much you would be willing to accept for the house.
- Important Paperwork You MUST Get Right Selling Your Distressed Home
When you’re selling without a realtor or agent, you’ll be responsible for ensuring your paperwork is completed. This includes making sure you’ve got all the right papers prepared and that your contracts meet the relevant standards.
Of course, this is a vital part of selling a house and it’s essential you get it right. If your contracts are incomplete or ineffective, you could continue to be liable for the property or you could face consequences in the future.
You may choose to have an attorney assist you with the contracts when you sell your home, as this can help to give you peace of mind. However, if you choose to sell a house to a company that routinely buys distressed properties, they will know and be able to provide the relevant paperwork throughout the sales process.
- Enhance the Property
Distressed property sales often include homes that have fallen into disrepair or which have been damaged. While you won’t want to spend large sums on the property, this doesn’t mean you can’t make small cosmetic changes to enhance it.
Even things like mowing the lawn and clearing the yard can make a big difference to the appearance of a property, so it’s worth taking the time to make the property look as visually appealing as possible.
- Consider All Options
When you’re first faced with a property in a distressed state, you may automatically decide to sell. However, it’s important to assess all your options and decide what’s best for you. Selling a distressed property can be the easiest way to release capital and save yourself a lot of work, you may want to consider carrying out repairs.
If you’re able to secure a loan, for example, you may want to have the property renovated and brought back to life. If you’re considering keeping the property, it’s often a good idea to get a number of quotes from builders, landscapers, electricians, and plumbers first. This will give you a realistic idea of how much it will cost to bring the property up to standard.
With this information, you’ll be able to decide whether you want to invest the time and money in refurbishing the property or whether selling your distressed home is a more sensible option.
- Consider Selling for Cash
Distressed properties can have a range of issues that prevent them from being appraised. If a house has suffered extensive water damage, for example, buyers who require a mortgage may be unable to find a lender who will offer them a mortgage on a distressed property.
However, this doesn’t prevent you from selling the property in its current condition. By selling a distressed property for cash, you can sell to a reputable firm and receive the funds quickly.
A property that can’t be appraised has a relatively small market, so selling for cash can be the wisest decision. While you could spend time and effort renovating it so that it can be appraised, this doesn’t mean it will necessarily be worth it.
With the option to sell the property without carrying out or financing repairs, selling for cash can be a great choice when you’re engaging in distressed property sales.
- Don’t Delay
Taking the time to consider your options can be advantageous but delaying a sale unnecessarily can have negative consequences. If you postpone for no reason, the property could sustain further damage while you’re deciding what to do with it. As a result, its value could decrease.
Furthermore, you may be paying to keep the property secure, which is going to increase your expenditure. It doesn’t take long for bills to build up, so taking action swiftly can minimize your outgoing payments and help you save cash in the long-term.
Depending on the structural integrity of the property and the security you have in place, you could also find that squatters and trespassers are attracted to the unoccupied property. This can bring a whole range of problems if they’re unwilling to leave or if they cause additional damage to the home.
While you don’t want to rush into distressed property sales too quickly, you shouldn’t take too long to sell your home either.
- Find the Right Buyer
When you’re selling any house, it’s important to find the right buyer. If you’re trying to appeal to the wrong demographic, your property could sit on the market for months or even years. If your house can’t be appraised, for example, there is no point advertising it to buyers who require a mortgage as they simply won’t get the financing they need.
Similarly, if you need to sell quickly, advertising your property on the open market probably isn’t the best way to go. While you may get multiple people wanting to view the property, you’re also going to have to deal with questions, missed appointments and low ball offers. This can add up to wasted time, a lot of hassle and, ultimately, no sale.
Once you’ve identified your priorities, such as a quick sale and fair price, you can determine which buyers the property is most likely to appeal to. With a range of options available, distressed property sales can be as innovative or straightforward and easy as you like.
GG Homes I Buy SD is a reputable cash buyer. We are one of a few companies that specialize in buying distressed homes. Our firm has a great reputation to ensure you can sell the property efficiently and quickly.
To find out more about selling a distressed property in San Diego, California, contact GG Homes I Buy SD today on (858) 218-0042 or fill out the form here.