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7 Things You Should Know When Selling a Distressed Property


The housing market in the United States has been in a serious state of flux for the last 10 years. In 2008, the housing market saw the largest pricing drop in history. This helped kick-start The Great Recession, not only in the United States but around the world.

The meteoric rise and subsequent free-fall of housing prices caused a rise in distressed property. There are untold numbers of houses and commercial property suffering from dilapidation due to owners not being able to afford the upkeep. Distressed properties can also be considered homes on the edge of foreclosure, due to delinquent payments.

There is still money to be made when selling distressed properties. We’ve compiled seven tips on how to get the most of your unused real estate.

How To Sell A Distressed Property

Selling a distressed home has its own logistics and things to keep in mind. These seven guidelines will help you get the best deal for your property in distress.

Let’s take a moment to define our terminology first, shall we?

What Is A Distressed Property?

A property becomes distressed when its owner is unable to keep up with the financial obligations of ownership. This could be due to defaulting on payments or being unable to upkeep the property according to safety standards.

The common types of distress include:

  • Foreclosure
  • Bankruptcy
  • Tax Liens
  • Divorce
  • Preforeclosure
  • Death in the family
  • Poor conditions

These conditions mean that property owners often need to sell in a hurry. This can place the seller at an extreme disadvantage, due to desperation.

Here are some tips to help you get the most out of your distressed property.

Tip #1: Fix-up Your Distressed Home Before Appraisal

Buying or selling a property generally involves an appraisal. This will set the property value for both parties.

Sometimes a property might not meet the criteria for an appraisal. Exposed floorboards or extensive water damage could disqualify a property and would need to be remodeled before it’s eligible to be appraised.

Certain renovations are prohibitively expensive, however. If you’re anticipating your repairs will take a sizeable out-of-pocket payment, you might be better off lowering the ticket price or selling your home “As Is.”

Tip #2: Sell For Cash

If your home isn’t eligible for appraisal, no lender is going to be able to finance the transaction. This means that even interested buyers may not be able to purchase your property unless they have cash-in-hand.


Investment groups like Jax Home Offer are one solution to this dilemma. These are people that look for bargain real-estate to fix up and sell for a profit.

You can also set up the sale like a land contract. This means the buyer makes a small down payment and then make monthly installments, similar to a mortgage.

Land contracts can have drawbacks for buyers and sellers alike, however. Proceed with caution and do your research!

Tip #3: Be Ready To Get Dirty

If you’re looking to get the best deal on your distressed property but don’t want to pay a fortune in expenses, you’ll have to tackle some of the dirty work yourself. Basic home repairs can be undertaken by DIY home repair enthusiasts. You can also deep clean your home and tackle certain design renovations to make your property more appealing.

Tip #4: Avoid Delays

Selling a property through traditional methods and channels can take months, if not years. Most people looking to sell a distressed property don’t have the luxury of time. Once mortgage payments have been defaulted on, the countdown towards foreclosure begins.

The other disadvantage of selling delays is the likelihood of damage being incurred. If you’re not occupying your distressed properties, unofficial tenants may take up residence. You’re responsible for any damages created by squatters.

You may end up getting fined for owning a property that’s not up to safety code, as well. You can be losing money, simply by owning an unoccupied house.

Tip #5: Understand Property Value

Selling a property always involves understanding the local market. You need to compare prices on comparable-sized houses. You also need to look at houses with similar amenities such as lot size, number of bedrooms and bathrooms, and the size of the living areas.

Distressed properties have their own logistics, however. Sometimes a house might not be able to be shown, due to unauthorized occupants or disrepair. The lack of financing options is a deterrent for many potential buyers, as well.

Start off by investigating the market around properties similar to your own. This will at least give you a base rate to go off of. Then adjust your price accordingly to attract the right buyers who might have cash-in-hand.

Tip #6: Verify Buyers

Since you’ll likely be working with someone who will be purchasing your property out of pocket, it’s important to make sure that they’re actually able to pay. Ask for some form of financial verification.

If you’re working out a land contract, you might ask for some proof of income as well. This will help ensure that they’ll be able to make ongoing monthly payments as well.


Tip #7: Keep Your Taxes Up To Date

Do keep in mind that you’re still accountable for paying your property taxes as long as it’s still in your possession. Don’t forget to keep up with payments lest you end up losing your house before you can get your money back.

Just because you’ve fallen on financial difficulties doesn’t mean you can’t get something back from your investment. Follow these investment tips to get the best deal for your home or property, as quickly as possible.

Want To Learn More About Real Estate?

The housing market’s in a constant state of flux and we renegotiate the laws around mortgages and finances. It seems there are contradictory statements in the media nearly every day about the current state of the real estate industry. It can be hard to know who to listen to.

Whether you’re looking to sell a distressed property or invest in commercial real estate, you’ll find what you’re looking for on PropertyTalk. We compile the best, most cutting-edge information, data, and research from every corner of the globe (and the Internet.)

Make sure to visit our forums, as well, to talk with other real estate investors and enthusiasts.

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