You can find distressed properties or fixer-uppers in most communities, even wealthier neighborhoods.  A distressed property is one that has been poorly maintained and has a lower market value than other houses in the immediate area.

Ascertaining whether the property you're interested in is a wise investment takes some work. You need to figure what the average house in a given area sells for, as well as what the most desirable houses in that area are like and what they cost.   That's where I come in.   I know the suburban Boston area, the communities and neighborhoods, and have extensive knowledge of market values and trends.

BUYING A FIXER-UPPER

Most homeowners know how to paint a bedroom or install a new light fixture, but those routine chores are a far cry from adding a second bathroom, remodeling an out-dated kitchen, landscaping an entire front yard and the like. Tackling these improvements without the necessary experience and expertise can lead to costly mistakes. And if the home really only needs easy, inexpensive or purely cosmetic repairs, your efforts probably won't add enough value to be profitable.

Do you have the expertise required to meet with contractors or make major improvements yourself?   As a general rule of thumb, improvements that are invisible to home buyers or merely bring the home in line with expected minimum standards don't add much resale value. If you make the wrong improvements, you won't see much, if any, return on your investment. Another potential pitfall is over-improving the home compared to other houses in the neighborhood.  Do you have a working knowledge of which improvements are likely to add value?   Asking a Realtor to guide you through these decisions will save you a lot of money in the long run! 

BUYING A SHORT SALE, OR REO, PROPERTY

A short sale means the seller owes more on the mortgage than the property is worth.  Unfortunately, with the declining market values nationwide the last couple of years, this situation is more widespread.   While not the best of circumstances for an owner, these properties can offer great opportunities for the savvy and knowledgeable buyer.  Realize your Realtor will be negotiating with the lender on a sale, not with the seller, as the mortgage holder has the final say in price and terms.

A REO, or bank-owned property, is one which has gone through foreclosure and is now owned by the financial institution.  Again, this real estate can offer great prospects for a buyer, but the old addage, Buyer Beware, must be carefully applied.  Because these homes are purchased "as is" there is no guarantee of their condition.  Keep in mind, when sellers realize they are about to lose their homes through foreclosure, it's not uncommon for them to stop caring about the property.

While distressed properties offer good prospects to a Buyer, you need to have a strong team on your side to protect you.  Start with a Realtor who knows the area, an inspector and contractor who know properties there, and an adequate balance in your bank account for unexpected expenses.  Contact me with any questions about this type of Troubled Real Estate.