Distressed property is property under a foreclosure order or is advertised for sale by its mortgagee or many times, like in today's real estate market, it's property that offered as a short sale. In other words, the mortgagor (homeowner) has experienced financial hardships and is not current with mortgage payments and must sell. In most cases, distressed property usually fetches a price that is much below its market value.
In 2009 government efforts, including temporary foreclosure moratoriums and a push to qualify more financially troubled homeowners for mortgage modifications, temporarily reduced the number of distressed properties coming on the housing market in the fall of 2009. But now a growing number of distressed properties appear to be hitting the housing market again. In today's market distressed properties make up from 25% to 50% of our inventory.