One man’s problem could be another man’s prosperity. For instance, the current housing market is witnessing an increase in the number of distressed homes for sale, opening up vast opportunities to the savvy buyer who takes full advantage of market conditions. A distressed property could be the best value for home buyers such as you while helping pressured owners become freed from a heavy burden. Let’s take a look at what distressed properties are and what the benefits of buying such a home could be for you.

Home foreclosure rates are on the rise and not expected to drop anytime soon. Higher mortgage payments, increased fuel expenditures and other factors are pushing a larger number of homeowners into the distressed seller category. These other factors can include:

Divorce
Death
Poor Health
Job Loss
A Myriad of Other Reasons
Together, once dutiful home owners are finding it difficult if not impossible to keep up with their mortgage payments. Therefore, within a three to four months timeframe a homeowner could see their home foreclosed.

One way that distressed property owners can avoid foreclosure is to attempt to sell their home before things totally spiral out of their control. In a soft real estate market, a distressed homeowner could find themselves selling a home for a price well below its value. However, this could still be an attractive option for the seller as the responsibility for paying for the house would be removed from their hands. For the buyer, a distressed home means paying less than market value and gaining a home that they possibly could not have been able to afford under normal market conditions.

In most cases distressed property isn’t the same as a fixer-upper but it could be. Likely, the current owner had been keeping up with maintenance, but recently fell upon hard times that have triggered the “sell now, before foreclosure later” action on their part. If the home has been neglected all along, a distressed property may not be the value you think that it could be especially if much needed repairs must be done. If that should be the case, your so-called “deal” could end up being no deal at all.

A distressed property seller may be more receptive to allowing you to pay a reduced price for their home if you negotiate the deal apart from a realtor. Usually, this type of seller is featuring their home on a For Sale By Owner {FSBO} site in the hopes of saving themselves the cost of realtor fees.

When dealing with a distressed property seller, sympathy and understanding on your part can go a long way toward clinching the deal. Chances are the current owner is embarrassed about their financial plight and doesn’t want to be too forthcoming about what lead up to their current troubles. Be prepared to close on the deal as soon as possible, therefore a pre-approval letter from a respected mortgage lender is essential to helping you secure the distressed property.