Which house is distressed property?
The answer is both houses could be a distressed property.
The two main types of distressed properties are physical distress and financial distress. Distressed properties are a major problem to the owners. But are they always a superior opportunity for the buyer? Distressed properties if not properly understood could be a major problem for the buyers also.
What Is a Distressed Property in Real Estate?
1 – One type of distressed property is where the owner is unable to keep up with mortgage payments, and is at risk of losing his/her property through foreclosure or repossession.
2 – Another type of distressed property is where the house falls into disrepair or is damaged.
3 – Distressed properties can also be where there is an absentee owner.
4 – Some distressed properties are because of title problems. There is no clear ownership or a responsible party for the property.
How are Distressed properties classified?
Distressed properties are classified into two major types. The first type is financial distress property. These types of distressed properties are when the owner can not make payments and the property is in foreclosure or being repossessed. It could also have a tax lien or judgement lien on the property. It could also be in probate.
Then second type of distressed home is physical distress. The house could just have been neglected for a long time creating a significant distress home. The house could have had a damaging event like fire, flood, mold or other ways. The current owner could have run out of money part way through a rehab or remolding project.
It is very important to understand what type of distressed home you are selling or buying.