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JAX In Top 5 for Percentage of Distressed Sales: Opportunities and Risks for Value-Seeking Buyers

By Siddharth Mariappan

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High Level of Distressed Sales in JAX. RealtyTrac’s March 2016 and Quarter 1 U.S. Home Sales Report shows that 27.6% of Jacksonville’s single family and condo home sales are of “distressed” properties such as bank-owned, short sales, or in-foreclosure homes. That number places Jacksonville in the Top 5 of of metropolitan areas with the highest levels of distressed property sales. Nationwide, the distressed sales rate is 18.2%, which is an increase from the last quarter of 2015, but still less than the 20.8% of one year ago.

Benefits and Risks of Distressed Sale Homes.

Distressed sales can offer Buyers an opportunity for getting a great deal, but they do pose risks:

“As Is” Condition. Distressed homes usually are sold “as is” and often lack appliances or have issues requiring significant repairs. A comprehensive inspection — which is for informational purposes only with an “as is” sale — is essential to avoid costly surprises.
Insufficient Appraisals. Distressed sales can pose problems with getting a satisfactory appraisal. Some distressed homes are in such disrepair that a lender may find it not habitable or lacking sufficient value to justify financing the purchase.
Winning a Contract. Perhaps the most frustrating aspect of buying a distressed home is winning the contract to buy it. Since a bargain home is attractive to investors hoping to flip or rent, traditional Buyers often have to compete with all-cash investors. It is not unusual for distressed sale homes to end up in a multiple offer situation. Non-cash buyers must have a strong financial pre-qualification and should consider strengthening their offers with terms such as putting down a high binder deposit.
The Waiting Game. Distressed sales are generally much more complicated than regular sales, and are notorious for taking unusually long times to get to close. They may not be a good choice for Buyers with a short time frame for getting into their new house. Patience
If you are interested in buying a distressed sale home, please give me a call to discuss your options.

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