Not All Distressed Property Sales Fit The Stereotype

California Distressed Real EstateAlthough distressed sales (REO’s, Bank Owned, Foreclosures and Short Sales) are the sexy buys right now, many people still have a negative perception of them. It’s important to understand that not ALL distressed sales fall into the same category as the stereotypical distressed sale.

I work with distressed sales on a daily basis all over the state of California and know there are some truly great homes that happen to be distressed. Here are some myths I’d like to bust.


Myth: All distressed sales are in terrible condition.

Busted: Some distressed sales are turnkey, move-in-ready. Sometimes the previous owner kept the home well maintained, or perhaps the new owner (a bank or investor of some kind) made all the repairs for you.


Myth: If you buy a distressed sale, you always have to pay back taxes and unpaid HOA fees.

Busted: After a property goes through the foreclosure process and the bank takes possession, these become charges for the bank to pay when they sell it. Beware, if you buy a short sale, you may have to pay for these items. Make sure to research title to find out about these charges.


Myth: Distressed sales will always sell for a discount.

Busted: The price of a distressed sale depends on the same factors as a traditional sale. Some distressed sales can actually sell at market value or even more. A distressed sale that’s move-in-ready, in a great location, when there are multiple interested buyers will likely not sell for below market. Many buyers make the mistake of putting in low ball offers just because a home is distressed; this can offend the bank and/or asset manager in charge of the home. Get with one of our California real estate brokers to determine the fair value of the home and make an offer there. If the home needs repairs, factor that into your price in the way of a credit at close. Don’t lose out on a good home ┬áby low balling your offer.


I think buying a distressed sale is a smart decision in this market. With Distressed Sales, Foreclosures, Short Sales and REO’s/Bank Owned properties dominating most markets, there are plenty to choose from and millions more to come. However, don’t worry about the “status” (traditional vs distressed) of the home you want. If you are searching for a home, don’t let the “status” affect your offer price.

Author: Scott Mehlman

Also Read: Should I Buy A Foreclosure in California?

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