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What Is a Distressed House and What Do I Do With It?


The average home price was up 5% in 2020 and 2021 is on track to see modest increases as well. While some people are taking advantage of the current real estate market and selling their homes for full price or more in some cases, others are buying up bank foreclosure properties. 

If you're in a position to scoop up one of these properties, also known as a distressed house, there are some reasons why you might want to go ahead and do it. 

Why do homes or properties become distressed? What do you do with a distressed house if you have one or purchase one? Keep reading to learn more. 

What is a Distressed Property? 

Do you have that one home in your neighborhood that is in a state of disrepair? This is a distressed property. How about homes ending up in foreclosure due to the massive unemployment rate that resulted from the pandemic? These are also referred to as distressed properties. 

A distressed property can be any property (home or land) whose owner has fallen behind on either the mortgage payment or tax bills, or both. 

A lot of times, companies will come in and purchase these properties and turn them into rentals or rehab and flip them for a profit. 

What Do I Do With A Distressed Property? 

If you're trying to unload a distressed property, there are a few things you should do to get the best price for it.

  • Fix some of the more important issues going on with the home. 
  • Verify potential buyers' information to prevent being a victim of fraud.
  • Be honest about everything to avoid the buyer pulling out at the last minute. 

Do you have a distressed property? Are you wondering "How can I sell my house fast?" Get a fair, all-cash offer for your property no matter the condition or reason on your timeline. 

If you're thinking about buying a distressed property, there are some things to keep in mind. Let's look at some of them. 

  • Research the area and try to find the most profitable real estate market. 
  • Look for up-and-coming neighborhoods. 
  • Get pre-approved for a mortgage to have a leg up on the competition. 
  • Use an experienced real estate agent, preferably one with experience with distressed properties. 
  • Stick to a budget for purchasing and rehabbing the home. 

Not all distressed properties are good investments. Do your homework before committing to any property. 

Do You Have a Distressed House to Sell? 

Now that you know what a distressed house is and that there is a market for them, you can explore your options. Are you a buyer looking for a distressed property or do you have a distressed house to sell? Whatever your position, research the best way to handle it for your situation. 

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