Distressed Seller

Please Take My Property

The definition of a Distressed Seller is someone who is anxious enough to make a deal such that the deal is advantageous to them and the investor(s).

These types of sellers are often called "don't wanters" - they simply don't want the property anymore, the headaches, the payments, the deferred maintenance, the tenants, etc. etc. ANYMORE!

In order for an investor to make money from a distressed seller, usually the homeowner must be willing to give away some or all of their equity in the deal. If there is no equity, then they must be anxious enough to sell for what they owe on the property, otherwise they'll be faced with doing a Short Sale and possibly being foreclosed on.

Some distressed sellers are created simply by being put in a situation they unexpectedly found themselves in, such as an estate sale. Inheriting a piece of property you don't want or don't know how to get rid of can make a lot of seller's anxious, so an investor can help the heirs dispose of the property and move on with their life, more than likely leaving behind a sad chapter.

Other times, the market creates a don't wanter. If someone is trying to sell their property in a Buyer's Market where there is a glut of property and they cannot sell it after six months, this homeowner may be very anxious to get rid of the property at a discount.

Where do you find Distressed Owners? There are many different techniques investors use. Here's a list of some of them that may work for you:

•Read the classified ads and look for desperate language like “OWC” (Owner Will Carry) or “Seller Negotiable.”

•Pick a neighborhood you really want to buy in and look for “For Sale By Owner” signs.

•Leave post cards that say “I Buy Houses” on the front door or on parked cars at houses with For Sale signs.

•Advertise with signs or newspaper ads that say “I Buy Houses.”

•Get a list from your realtor of homes that have been on the market for longer than 3-4 months.

•Call landlords with For Rent ads in the newspaper and ask them if they’d consider selling. Maybe they’re tired of landlording.

•Estate Sales or Divorce attorneys.

•Read the Tax Lien Sale notices – these sellers may be on the verge of losing their home if they can’t pay their taxes.

Once you've located a potential distressed seller, make sure to perform your due diligence and evaluate the market, comparables, neighborhood and appreciation. You want to make sure you're buying in a good area, but not overpaying for the property.

Also, don't confuse a distressed owner with a distressed property. Some of these properties may be in excellent condition, it's just that the owner needs to move on. If you are looking at a distressed property, then be sure to factor in the Cost of Repairs to your purchase price.

Learning to notice the signs of a Distressed Seller can help you get bargain priced properties and solve a problem for someone else.