Finding a home at a low price may seem like an absolute bargain – and it's possible you've just discovered a real find, but there are reasons homes sell cheap. When the price of a home seems too good to be true, it's time to ask questions and do some homework to find out why the price is so low and if it's the bargain you really thought it was .
Despite the pressure from the salespeople, take your time – the greater the pressure, the more careful you should be! We're exploring some of the reasons houses might be cheaper than expected.
1. The property is flooded
Clearing up after a flood is demoralizing – if there has been multiple floods it gets worse. However, some homeowners find the first such event so demoralizing that they pack up cheap and sell out. Should you consider such a property? After all, it can be a relatively small risk. Companies that specialize in flood insurance may have the answers you are looking for. After all, they calculate the premiums based on the risks. In addition, it is worth paying for a professional construction inspection. It is possible that serious damage that you are pursuing has been masked with a few pops of color. Know what you're getting and weigh the risks – a home that has already been flooded may not be such a bad buy if there is no structural damage and flooding is rare.
2. It is in a "bad" area
The fact is, not all "bad" areas actually look bad. If you are new to town, you may want to research the crime statistics for the area where the budget home is located. Again, it doesn't have to be a deal breaker, but knowing what you're getting into can help you make an informed decision. You may need to prepare for the added cost of strong security measures to fend off the criminals or vandals that made the previous owner sell cheap and leave Dodge.
3. The owner is bankrupt or at risk of bankruptcy
When people face overwhelming debt, selling assets can help hold off their creditors – or even pay off the debt in full. At times like these, the seller is in a hurry to raise the funds needed and may undervalue the home just because he or she needs to raise money quickly. While we may sympathize with people in this distress, it is wise to check that there are no hidden reasons for the hasty sale. At the very least, a site inspection report will show the structure is free of major defects that could later prove costly.
4. A deceased estate must be distributed
The liquidation of a deceased's estate can take months or even years. When all legal details have been clarified, the heirs are often in a hurry to get their promised inheritance into their hands. You just don't want to wait any longer for the assets to sell and you may be willing to accept far less than the assets are really worth. While this seems like an ideal scenario, it is still wise to make sure that there are no hidden reasons for the low price.
5. It is currently a buyers market
The disaster of 2020 affected the real estate market and the financial situation of property owners. However, it is still not a "buyers market" in the true sense of the word. The supply is low and the demand unexpectedly high. With low interest rates, many first-time buyers take the plunge. However, the situation remains volatile and it is possible that the currently unfazed real estate market will collapse in the near future. In a buyer's market, those who want to buy a home become in charge – and that includes what they are willing to pay for real estate.
Whatever the reason for low prices, be careful
A cheap home can be a real investment – or a money trap. Take the time and try to negotiate a formal offer until the results of a building inspection are in if you are concerned that your affordable dream home will get another buyer before you have done the due diligence. However, it is strongly advised not to make a home purchase until you know exactly what you are getting, and a tour of the house will not tell you everything you need to know. It is really possible to secure a home purchase at a far lower cost than expected. However, if you don't want your lucky find to turn into a domestic disaster, then you should be careful.
