Would this be a distressed property?

adellabedella_usaFebruary 5, 2011

I've been looking at definitions on-line and am not sure if this would count. This is for a newish custom house built in 2008. A year or so after building, the gentleman lost his job. The house has now been on the market for around two years. The price has dropped $100K on a $550K house. I have not been in the house, but have been told that the house has some custom features that not everyone would like. I have no details on what the exact features are. I don't know if the owners have started a forclosure process or are behind on payments. My question is would this be considered a distressed property?

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ottawavalleygardener

I've never heard this term, but google defines it as: "Property that is under a foreclosure order or is advertised for sale by its mortgagee. Distressed property usually fetches a price that is much below its market value." So I guess you need to find out if the owner is selling it, or the mortgagee.

    Bookmark   February 5, 2011 at 2:16PM
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sue36

I wouldn't consider that "distressed" because you have no information on the condition of the mortgage. But maybe a "motivated seller". Why does it matter?

    Bookmark   February 5, 2011 at 5:46PM
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adellabedella_usa

"Why does it matter?"

We're looking ahead. We live in a neighborhood of new houses. So far, zero houses have been resold. My dh may get transferred this spring. We should know sometime next month. If this other house sells, it is our comp. I don't want this house as my comp.

We've always known we might have to sell. We put a lot of effort into curb appeal and trying to design something that was nice for our family, but had appeal to others also. We think our house would sell relatively fast for the neighborhood. A low comp on the same street could hurt us. I know several realtors that could check, but if we move, we will have to go through corporate relocation. We would not be allowed to talk to realtors ahead of time. I'm looking at some "what if's", but I don't have full info.

    Bookmark   February 5, 2011 at 6:51PM
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brickeyee

"We live in a neighborhood of new houses. "

Selling within 3-4 years of purchase is not likely to make any money, and withing 1-2 years often loses money after the expenses and commissions are paid.

    Bookmark   February 6, 2011 at 10:46AM
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adellabedella_usa

I know about selling this early. It's not really a choice. If we are asked to move, we move. We are most likely to break even if we don't have a bad comp since the company pays the costs of commissions, etc. The appraisal came in about $50K higher than what we built it for last year. Not sure if that will hold this year. It is a very desireable neighborhood. We built one of the smaller homes in the neighborhood so we have huge castles pulling up our prices. I guess we will wait and see.

    Bookmark   February 6, 2011 at 12:47PM
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sweet_tea

I suppose they (coporate relo company) will be referring you to realtors and want to get the referral fee. In order to do that, the realtor couldn't have had prior selling discussion with you, is my guess.

So meet with 1 realtor that you would rather not use in the end anyway. However, when they refer you to a realtor, maybe you have no choice who it is. Maybe they give you some to choose from, maybe they pick one and that's it. Who knows, it could be from a firm from 30 miles away. You never know.

    Bookmark   February 6, 2011 at 2:28PM
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adellabedella_usa

I only want to talk to realtors that I might actually use. It's really not fair otherwise. There is also a chance, that we could be bought out and not have to deal with selling. Regardless, the price will based on an appraisal and I don't want this guy as a comp.

    Bookmark   February 6, 2011 at 3:44PM
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Billl

Welcome to 2011. Pretty much everything that is selling is either "distressed" or with a "motivated seller." Owners who don't need to sell are generally sitting on the sidelines and waiting this thing out.

If the property goes into foreclosure, it won't be a comp. If it sells via normal channels, it will be.

Realistically, this is a comp. It has been on the market for an extended period of time. There has been no rush to sell at a discounted amount. There is no reason to believe the final sales price does not reflect the full market value of this home.

    Bookmark   February 7, 2011 at 11:12AM
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adellabedella_usa

Bill, you're right. I'm just hoping that the guy doesn't sell before us if we have to sell. We should know in the next month.

    Bookmark   February 7, 2011 at 1:04PM
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