What is a Distressed Property? What Causes a Property to Become Distressed?

As a CDPE – Certified Distressed Property Expert, we define a distressed property as:

1. A property that has fallen into disrepair and is in poor physical condition.
   • It is important for agents and homeowners to understand that a home in poor physical condition can easily push an owner who has equity in their home, into actually looking at a short sale or foreclosure situation. Often when a Competitive Market Analysis (CMA) is presented to a homeowner, the agent has not yet seen the home. In good condition the home will fetch enough money to cover all expenses, but when it becomes clear the home needs to be painted, needs a new AC unit, or a new roof, suddenly it is found that when adjustments to the likely sales price are made, the mortgage can no longer be made in full.
2. A property that is either going through the foreclosure process now, or will be in the near future.
   • Often something as simple as a job transfer can create a situation where a homeowner who is now paying their mortgage, into one who can no longer afford to. In their new city, they are paying rent or for a new mortgage and now find they can no longer pay for the home in the old city.
3. A property where the owner(s) are experiencing financial difficulties. There are many causes of these financial difficulties.
   • Loss of job
   • Reduction of income
   • Business failure
   • Property Damage such as due to hurricane or flooding
   • Death of a spouse or another wage earner in the home
   • Death of a family member even if not a wage earner can cause financial distress
   • Illness
   • Inheritance
     • Not normally thought of for financial difficulty, but imagine the son or daughter that is left a million dollar property after their parents death. Suddenly they have to make mortgage payments on that home along with high property taxes, HOA fees, maintenance and more. They are now the owner and the foreclosure will go on their record.
   • Divorce
   • Separation
   • Relocation
   • Military Service
   • Mortgage Adjustment – Increase in Mortgage Interest Rate
   • Increase in Insurance Premiums
   • Property Tax Increase
   • Too much credit card or other debt
   • Incarceration
4. A property where the mortgage obligation exceeds the homes current value
   • May require a short sale if sold

There is great information available to help homeowners who are considering a short sale, foreclosure or bankruptcy, and some programs that may be available to you. Don’t be one of the 70% of distressed property homeowners who never ask for help and just let their home go into foreclosure.

Are you a buyer or investor? We can assist you in finding the best short sale or foreclosure deals. Give us a call at 813-469-3163 or email us at Jeff@TampaForeclosureSource.com.