What is Distressed Property?

A distressed property is a property that needs work doing to it. It could be what is called cosmetic distress, which simply means there is no major structural work to be done – you might just need to repaint, re-plaster or remove some out of date wall paper. However, cosmetic distress can also include putting in a new kitchen or bathroom and totally revamping the whole property.

Properties in cosmetic distress are the bread and butter of many property investors and developers. This is because they are generally very easy to put right and either put straight back on the market or rent out. Many a structurally sound house proves difficult to sell because the decoration is out of date or is unique to the seller. Or possibly the property is really smelly because the seller has pets.

Whatever the case may be, ordinary buyers often either can’t see past these minor issues or can’t be bothered to put them right when they have the option of buying a similar property down the road within their budget that hasn’t got these issues. Hence, these sorts of properties are ideal for the property expert to buy below market value.

Properties with structural problems are normally more risky to take on. Hence you may be able to negotiate even bigger discounts than you can with ones that are just in cosmetic distress. However, you need to know exactly what you are doing, because, if you don’t, you could end up feeling very pleased with yourself because you managed to get a discount of 40% on what the full market value of the property would be, only to find out that it will cost 60% of the full market value to put the house right.

**Nothing on this website should be confused with financial or legal advice. If you need this, or any other type of advice, please seek the help of a competent professional. In addition, because real estate laws change all the time and differ from state to state, and even city to city in the same state, everything in these pages should be considered general marketing advice and ideas. Please see link to full Disclaimer at the bottom of this page.

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