Finding a home for a low price may seem like an absolute bargain – and it’s possible that you’ve just uncovered a real find, but there are reasons why homes get sold cheap. When a home’s price seems too good to be true, it’s time to start asking questions, and doing a little homework to find out why the price is so low, and whether it’s the bargain you really thought it was.
Take your time despite pressure from sellers – in fact, the greater the pressure, the more careful you should be! We look at some of the reasons why homes could be priced lower than you’d expect.
1. The Property is Subject to Flooding
Clearing up after a flood is demoralizing – if there have been several floods, things get even worse. However, some homeowners find the first such occurrence so demoralizing that they pack up and sell out cheap. Should you consider such a property? After all, it may be relatively low risk. Companies that specialize in flood insurance may have the answers you’re looking for. After all, they calculate premiums based on risks. Over and above that, it’s worth paying for a professional building inspection. It’s possible that severe damage that will come back to haunt you has been covered up with a few licks of paint. Know what you’re getting and weigh the risks – a home that flooded once before may not be such a bad buy if there’s no structural damage and floods are rare.
2. It’s in a “Bad” Area
It’s a fact: not all “bad” areas actually look bad. If you’re new in town, you might want to investigate crime statistics for the area in which the low-priced home is located. Once again, it doesn’t have to be a deal-breaker, but knowing what you’re letting yourself in for will help you to make an informed choice for buying a home. You may have to prepare yourself for the extra expense of strong security measures to put off the criminals or vandals that made the previous owner want to sell cheap and get outta Dodge.
3. The Owner is Bankrupt or in Danger of Bankruptcy
When people face overwhelming debts, selling off assets can help to stave off their creditors – or even settle debts in full. At times like these, the seller is in a hurry to raise the necessary funds and may underprice the home simply because he or she needs to raise cash fast. Although we may sympathize with people in this plight, it’s wise to check whether there are no hidden motivations for the hasty sale. At the very least, a building inspection report will show that the structure is free from major defects that could prove costly later on.
4. A Deceased Estate Needs to Be Distributed
Winding up a deceased person’s estate can take months – even years. By the time all the legal details are sorted out, heirs are often in a hurry to get their hands on their promised inheritance. They simply don’t want to wait even longer for the assets to be sold, and may be willing to accept far less than the assets are really worth. Although this may seem like an ideal scenario, it is nonetheless wise to ensure that there are no hidden reasons for the low price.
5. It’s Currently a Buyers’ Market
The misfortunes of 2020 have had their effect on the property market – and on property owners’ financial situation. However, it’s still not a “buyers’ market” in the true sense of the word. Supply is low, and demand is unexpectedly high. With interest-rates low, many first-time buyers are taking the plunge. However, the situation remains volatile, and it is possible that the currently unfazed housing market could come crashing down in the near future. In a buyers’ market, those looking to purchase a home will call the shots – and that includes what they’re willing to pay for property.
Whatever the Reason for Low Prices, Proceed With Caution
A low-priced home can be a real investment – or a money-trap. Take your time, and try negotiating a formal offer pending the results of a building inspection if you’re worried that your low-priced dream home may get another buyer before you’ve done due diligence. However, it’s highly inadvisable to undertake a property purchase until you know exactly what you’re getting, and a guided tour of the house doesn’t tell you everything you need to know. It really is possible to secure a home purchase for a far lower cost than you expected, but if you don’t want your lucky find to turn into a domestic disaster, it’s best to be cautious.