What is distressed?
Most people know someone who has had a difficult time in life or with their house. A lot of times the term distressed is used. When some people think of distressed houses, they are not exactly sure what distressed means. Other people may be surprised by the many different situations that cause distress.
Sometimes the signs are obvious, and for others, there may be no indication at all. It can be sudden or a state that is built up over time. Whether it is the owners or the property itself, here are some of the reasons a property may be distressed.
Separation or Divorce
Often, when there is marital trouble, the couple may begin to neglect the house long before the issue is in the open. This may not be to lack of ability or money, but simply to spite the other partner. Cleaning may stop, or the yard is not maintained. At first, there may be no signs at all that the home owners are distressed. In cases where the legal course to a divorce is long, a house may be unmaintained for a year or more until the settlement is finalized. This can escalate into larger problems if the couple cannot agree and major work, such as a roof replacement, is neglected.
These distressed properties are usually sold quickly so the couple may settle accounts and get on with their separate lives. Typically very little work is needed to make the house presentable again.
Illness or Decline
An illness may mean that one of the home owners or a close family member has become the focus of the family. A severe illness such as cancer or a progressive, long term condition may eventually force the home owners to shift their focus from their home to the family member. In cases where medical expenses become overwhelming, a home owner may have to choose between home loan payments and medical bills. This type of financial distress can sometimes be quickly resolved with the sale of the house.
In some cases, the home owner's health may decline and require assisted living.The house is no longer a safe and suitable environment. A quick sale can help ensure that the proper care is received as soon as possible.
Death
A death in the family is tragic and is distressing in itself. Sometimes the surviving family members are not able to carry on and the property becomes a burden. If there is insufficient income, or no life insurance policy at all, the remaining spouse may not be able to fulfill the mortgage commitment on their own.
In cases where there is just one owner, the family who inherits the property after the death may be out of state and do not want the responsibility of the property. They may put the property up for sale at a discounted price in the hope of getting it sold quickly before they default on the mortgage.
Relocation
Relocation may be triggered by several factors. Perhaps the happiest is marriage. When a newly-wed couple is fortunate to have the choice of two residences, one is usually sold. Another type of exciting relocation is moving for a new job. A promising career opportunity is a good reason to sell a house and move! This type of sale is usually done very quickly, unless the owner is comfortable carrying two home loans.
A less than happy relocation is to care for an aged or ill family member. In cases where the potential duration of this care is unknown, a home owner may choose to sell their house and move permanently.
In most cases a quick sale will relieve the owner of the responsibility of a house that may be across the country or in a neighboring city or state. It affords the opportunity of moving forward with one’s plans.
Financial
Financial distress can come in many forms. Some of the previously mentioned scenarios have a financial component that may cause the property owner to move towards a quick sale to unburden themselves of a property.
The loss of a job, or pay cut would be another reason to cause financial distress. The owner may find it difficult to manage the expenses of a house, such as loan payments, taxes, services or insurance. A property owner may have an “emergency fund” to cover these costs for a few months, but in the event that another job is not on the horizon, a sale might relieve the owner of the financial strain. It is also possible the owner may have already missed some payments and is working to get their note holder to accept a short sale to prevent the property from going into foreclosure.Condition
The condition of the property may sometimes be a factor indicating that the house is in distress. The property could just be severely outdated. In some cases these properties need cosmetic changes like new kitchen and bathroom cabinets and fixtures. In other cases the house may need new plumbing, electrical work, a roof replacement, foundation repairs – or even a complete gutting. Sometimes the owners prefer to sell at a discounted price than to live in a “renovation zone.”
Sometimes an owner may start work and not be able to complete it. It may be that the project was underestimated and more resources are required than are available.
There could be something like electrical problems or foundation issues behind busted up dry wall. It is also possible that the owner is a professional landlord and is juggling several properties and has run out of funds for repairs.
In most of these cases – except for the gutting or unfinished renovations– a house may continue to be livable, all be it not in the best of condition.
This is important because it means a potential buyer can qualify for a loan. In cases where a house is not habitable, sales often are “cash only” and tend to be lower than market average.
Disaster
There are many events that may be considered to be disasters. A house may burn partially or completely and the owners may walk away. In addition, a flood either natural or from faulty plumbing may leave a house with mold issues. A foundation, wall or roof might collapse leaving the property exposed to the elements. In most of these cases, the owner might take the insurance settlement and walk away. If they retain ownership to the destroyed house as part of the settlement, they may wish to sell it quickly before it deteriorates further.
A fast sale will get them money before further problems arise.
Partnership Dispute
In some cases, usually for rental properties where the property is part of a business, there may be a partner dispute.
When there is a disagreement between co-owners, a sale of the property might be the best way to cut ties and move on.
Once a business agreement has reached this point, the parties involved usually prefer to dispose of the property quickly and might offer a discounted price.
Bank Owned (REO)
Most people have seen signs for bank owned properties in recent years. Fortunately they are becoming fewer and fewer. When lenders repossess properties, sometimes the inhabitants damage it on the way out. They might bust up walls or damage plumbing. In these cases, the buyer must be wary because many of these properties need extensive renovations and they may have been abandoned for a long period of time.
Sometimes the houses are perfectly fine, but the lender doesn’t want to keep the property in inventory. These properties usually are priced below market value. Banks make money by lending cash – not holding on to houses!
If you are selling a distressed property right now, we can help.
If you have come to the realization that it is time to move right now to have a better life, but your house isn’t ready for the traditional market, we can help.
If you are juggling too many responsibilities to sell your house yourself this summer, then there are people who specialize in the sale of properties "as is" - usually within a week to resolve the situation quickly. We have a team of professionals able to assist you immediately.
Contact us for details.
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Article Sources:
Lynda Bathory
