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Distressed properties are a type of real estate that is being offered for sale because of an impending foreclosure or repossession.

There are several types of distressed properties, usually depending on what stage of foreclosure the property is under.

There can be distressed properties for sale:


  • by the homeowner who has defaulted on their mortgage and are looking to sell before they get any further behind,

  • scheduled for public auction by lenders or courts as the last stage of the months-long foreclosure process.


Regardless of how the property is listed for sale, they typically have a "below" market list price for a faster sale. In some cases, distressed homes may sell anywhere from 30%, to 45%, even up to 60% off what they are actually worth, which makes them an incredible opportunity for home buyers and real estate investors. 

The sale price of distressed homes can depend heavily on the current real estate market within the local area. The inventory of homes for sale can be a heavy factor in what a distressed home sell for.


Banks are run like a business because they are a business looking to earn a profit. If it costs more to foreclose on a home rather than agreeing to a short sale, the bank is more likely to agree to the short sale. With a foreclosure property, a bank takes possession of the house, and then resells it at a mortgage auction to the highest bidder.


Short Sale Negotiators represent the seller (or homeowner) and negotiate on their behalf with the lender or bank. Short sale negotiators are often hired by the investors, who need to negotiate the payoff down to a level that they intend to purchase the property for.


Option 1: Stay in your home and work to build more equity. ...

Option 2: Refinance your mortgage. ...

Option 3: Sell your house and use your savings to pay the amount you still owe. ...

Option 4: Sell your home through a short sale process. ...

Option 5: Foreclose on your home.

Option 6: Declare bankruptcy.

When you are underwater on your home it can be extremely stressful. You may worry if your home will rise back up in value showing equity again, or feel like you are drowning in debt. Don’t be afraid to reach out to a trusted real estate agent who is certified as a Short Sale / Foreclosure Resource. Patrick O'Malley is SFR Certified by the National Association of Realtors and can help determine if you are truly underwater, plus he has an eye on the current market conditions that can determine your current home value and how long it might take for your home value to increase to the level you need.

Patrick O'Malley Atlanta Realtor

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