Distressed properties are often available to buyers at attractive rates, as much as 40 percent below the market price. Indeed, a great option for any one looking to expand their property portfolio. But doesn’t it sound too good to be true? It might just be; unless you understand the risks associated with buying a distressed property to mitigate them successfully.


Generally speaking, a distressed property is a property that is in a condition of physical or financial neglect. Yes, most often, a property comes up on the market as a short sale because the owner is unable to service the home loan and the property risks being foreclosed or has already been foreclosed upon.

Such properties offer big bargains to potential buyers, as lenders want to recover their losses as soon as possible and often slash prices to affect the sale quickly. Currently, buyers can find several distressed properties at the Gold Coast, Brisbane. According to SQM Research, there are almost 27,000 distressed properties for sale around the country due to reasons such as death, divorce and desperate vendors.

Financial hardships can befall anyone – due to unemployment, illness or relationship issues such as undergoing a divorce. If you find yourself struggling to make your monthly mortgage repayments, it is best to inform your lender and seek help to prevent your house from being repossessed. Most lenders have financial hardship assistance programmes in place. Your lender could offer you a repayment holiday, lower interest rate or refinance your home loan over a longer term to help you tide over the situation. Learn more about financial hardship assistance here.

Buying a distressed property

Purchasing a distressed property is different from a regular property purchase. Often, you could spot a distressed property by its appearance. You might notice broken windows, an overgrown yard, peeling paint and a general state of neglect that makes a distressed property stand out in the neighbourhood. However, a better option is to contact a real estate agent who is experienced in distressed properties and could get you directly in touch with distressed sellers, for a bargain deal. Online listing sites such as Trovit and SQM Research might also be good starting points to search for distressed or foreclosed properties.

An important thing to note is that distressed or foreclosed properties are sold on ‘as is where is’ basis. This means that buyers exactly get what they see – the seller (owner or lender) will not fix anything in the house before the sale. Thus, when you buy a distressed property, the cost of getting the house in shape falls squarely on your shoulders. Before you fall for the attractive price, it is only prudent to take into account the cost of the repairs to make sure the property is worth the reduced price tag. If you are not experienced in making renovations, have the property assessed by an expert to understand the costs involved.

Tips for buying distressed property:

Location – As with any property, the location of a distressed property will affect its value. Buying a property in a neighbourhood full of distressed properties is unlikely to be a profitable deal. Research the prices of comparable properties in the neighbourhood to ascertain whether the deal is really profitable or not.

Property inspection – Getting a professional property inspection could save you plenty of money and hassle in the future. Distressed owners know their property may be foreclosed upon in the future, and often end up neglecting it.

Making an offer
– Even though banks and distressed owners want the property off their hands as soon as possible, don’t expect them to entertain exceptionally low offers for sale. Instead, make an educated offer by taking into account the price of comparable properties in the area and the amount you’d need to spend to get the property back in shape.

Keep cash handy – Many investors purchase distressed properties with cash, and it helps to save as much cash as possible for making a down payment to be in a strong position. If you don’t have 100% cash, get yourself pre-approved for a home loan so that the sellers take you more seriously. Experts at HashChing could help you get pre-approved for your home loan. Get in touch with a broker now.

Distressed homes are often left in a state of neglect for long periods of time, and might require extensive repairs and lengthy paperwork for sale. However, with proper research and planning, you could find yourself a worthy deal at a bargain price. At HashChing, we help you finance your property dreams by providing competitive home loan deals from over 60 lenders across Australia that you can compare online. Speak to a mortgage broker online to be guided better.

By Vidhu Bajaj
HashChing Content Writer

HashChing is helping Australians by providing access to the pre-negotiated home loan deals. Obligation free consultation with one of our partner brokers might save you time, hassle and money.