In real estate, a Distress Sale refers to the sale of property by an owner who is under significant financial or personal pressure to sell quickly. This pressure may result from circumstances such as foreclosure, default, bankruptcy, divorce, job loss, or inability to maintain the property. Because time and leverage are limited, the seller is often unable to negotiate for the best possible price.
As a result, distress sales typically occur at prices below market value. These sales can affect neighborhood property values and are closely examined by appraisers and lenders to determine whether they reflect true market conditions or exceptional circumstances. Distress sales are distinct from normal, arms-length transactions because the seller’s motivation is driven by necessity rather than choice.
