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Fact or Fiction: Distressed Properties
by Staff
A tanking housing market at the end of the 2000s left a lot of people without homes. With indications that the housing market has bottomed out, however, it could be a good time to get back into the real estate market. One way to get a good deal on a house is to purchase a distressed property. But before you go house hunting, take a crack at this quiz to test your distressed property knowledge.

Fact or Fiction: There is no difference between a short sale and a foreclosure.

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Fact or Fiction: A distressed property is a property whose owner has defaulted on their mortgage.

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Fact or Fiction: In 2011, a full third of homes on the market were distressed sales.

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Fact or Fiction: Banks will usually try to get more for a distressed home than a regular home, so they can recoup their losses.

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Fact or Fiction: Distressed homes are always sold "as-is," leaving all repairs to the new owner after the sale.

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Fact or Fiction: If a home you are interested in purchasing is too severely damaged, the lender might deny you a loan because the property is "deemed unlivable."

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Fact or Fiction: There is no need to be pre-approved for a loan before negotiating a purchase of a distressed home, since the process takes so long.

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Fact or Fiction: The National Association of Realtors began offering a certification for experts in short sales and distressed properties in 2009.

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Fact or Fiction: It's a good idea to buy a foreclosed home in a neighborhood where most nearby homes have been foreclosed on. It will make the price even lower.

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Fact or Fiction: Banks selling distressed properties will not allow prospective buyers to have home inspections done.

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Fact or Fiction: Foreclosed homes usually have damage, such as missing appliances and fixtures, or vandalism.

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Fact or Fiction: Closing a deal for a distressed home is extremely time consuming. It can take up to 12 months from start to finish.

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Fact or Fiction: Just like any other real estate sale, the seller usually takes responsibility for paying closing costs in a distressed sale.

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Fact or Fiction: Banks and lenders will typically not entertain any counteroffers from prospective buyers of distressed property.

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Fact or Fiction: There is no difference between an REO and a foreclosed home.

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Fact or Fiction: Because of the housing crisis, larger homes are in less demand, and can offer the best deals of any distressed properties.

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Fact or Fiction: Since banks are so desperate to unload distressed homes, buyers don't need to offer much of a down payment to purchase them.

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Fact or Fiction: Often, distressed homes' mortgages have been sold to third parties through securitization. That third party, usually an investment manager, will have to approve any short sale deal.

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Fact or Fiction: States do not have jurisdiction over foreclosure law, so you do not need to research state regulations if you are purchasing a distressed home.

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Fact or Fiction: You shouldn't use a real estate agent if you are buying a distressed home.

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