Weekly Special | July 2, 2016

Two Types Of Distressed Properties Remain

The difference between arms length home sales and distressed property sales has reached a delta of 40%. This means that distressed properties are selling for “60 cents on the dollar” when compared to sellers who are not selling under conditions of duress.

As fewer and fewer of these troubled properties remain, it is likely that we’ll be seeing “the bottom of the barrel” in terms of conditions and desirability.

While this does not mean a new distressed property won’t show up from time to time, it merely means that the distressed market is now a dual market:

Now, when you search distressed homes for sale, you need to recognize that there are two very different types of these properties that are in the mix.

There is the inventory that has been around for quite some time, and then there is the new entrants, those with homeowners who have new problems bringing them to the market.

It is very likely that some of the long-time inventory of distressed property is in poor condition and is not a good buy at any price, whereas newer distressed property might be solid investments.

The key is to be a prudent shopper. Always being by determining the ‘highest and best use value’ of a property before you even begin to evaluate its condition. This will keep you from wasting time or worse, developing an unprofitable compulsion for a property.

This issue went with a longer report on our blog: read the full blog post. The original one-page Weekly Special PDF is still available.