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As 6% of the Housing Inventory, Distressed Properties are Showing Their Limitations
Potential buyers should keep their options open and avoid limiting their housing search to distressed properties.
According to Dawna Davies, owner and broker of Davies Company Real Estate, investors and homebuyers have continued to buy up the available inventory of distressed properties. The distressed property market however, does have limitations. While there is an opportunity for investors and potential buyers to get a discount on a distressed property, there is also a lot of competition among buyers.
“At the moment distressed properties, also known as short sales, foreclosures, bank-owned property, and notice-of-default-
In January the sales of distressed properties in San Luis Obispo County totaled 36.7%, down considerably from February 2011 when the total was at a year high of 52.7%. Since February 2011 the amount of distressed properties sold has been declining. This means that the amount of available distressed property types, foreclosed property or short sale property, is becoming more limited.
The distressed property market is competitive and excludes property with equity that may also be a good deal and is typically easier to finance with conventional lenders. Equity sales are conventional transactions where the home is worth more than the amount of the total loans, or may have no loans. Property with equity, according to Davies, is generally better cared for and has less corrective work to be done.
“If an investor does not have enough cash to purchase without financing, they should not focus on only distressed properties. They can still take advantage of the lower interest rates, motivated sellers, and get in the market while it is setting record highs for affordability through a conventional equity sale. Recently, I am seeing many competing offers on properties, including all-cash offers and some properties going for more than asking price, ” said Davies.
Dawna Davies joined the Davies Company in the early nineties and is now owner and broker. She has over 25 years of experience in the sale of homes, investment properties and property management in the San Luis Obispo County area. She is a single–sided broker and has signed over 4,000 closed sales, purchases and leases in her real estate career. For more information, visit http://www.daviesco.com/