DEFINITION of 'Distressed Sale'

When property, stocks or other assets are sold in an urgent manner, often at a loss. Distressed sales often occur at a loss because funds tied up in the asset are needed within a short period of time. The funds from these assets are most often used to pay for debts, medical expenses or other emergencies.

BREAKING DOWN 'Distressed Sale'

Mortgage borrowers who can no longer pay for their mortgaged property, may opt to sell their property in order to pay the mortgage. Examples of situations where distressed sales occur include divorce, foreclosures and relocations.

RELATED TERMS
  1. Distress Cost

    Costs that a firm in financial distress faces beyond the cost ...
  2. Distressed Securities

    A financial instrument in a company that is near or is currently ...
  3. Mortgage Short Sale

    The sale of a property by a financially distressed borrower for ...
  4. Real Estate Short Sale

    Any sale of real estate that generates proceeds that are less ...
  5. Workout Assumption

    The assumption of an existing mortgage by a qualified, third-party ...
  6. Financial Distress

    A condition where a company cannot meet or has difficulty paying ...
Related Articles
  1. Managing Wealth

    The Pros And Cons Of Buying Distressed Property

    Real estate bargains abound, but is buying a distressed property more trouble than it's worth?
  2. Investing

    The Pros and Cons of Distressed Debt Investing

    Distressed debt investing is suitable for professional investors. Besides heavy risk factors to consider, this investment type can provide a large ROI.
  3. Investing

    Are Distressed Homes Worth Buying?

    Here's a look at whether it is a good idea to buy a rundown home to repair for profit.
  4. Investing

    Why Hedge Funds Love Distressed Debt

    When hedge funds buy up bonds from bankrupt companies, should investors follow suit?
  5. Investing

    How To Profit From Debt Securities In Failing Companies

    Learn about the vulture funds that prey on the market's weakest companies by investing in distressed debt.
  6. Managing Wealth

    Investing In Foreclosures Not A Get-Rich-Quick Venture

    Investing in this kind of real estate takes capital, time and careful planning.
  7. Investing

    5 Ways To Buy A Foreclosed Home

    There is no shortage of foreclosure properties. Find out how you can buy one for yourself.
  8. Investing

    What Is A Short-Sale Property & How Does It Work?

    A short sale is an alternative to foreclosure whereby indebted owners get permission from a bank to sell their house for less than amount of the mortgage.
  9. Investing

    Helping Clients Navigate Short Sales And Foreclosures

    Both buyers and sellers can benefit from a real estate professional experienced in dealing with short sales and foreclosures.
  10. Investing

    Distressed Debt An Avenue To Profit In Corporate Bankruptcy

    Use debt securities to attack bankrupt companies and scavenge them for profits.
RELATED FAQS
  1. If my mortgage lender goes bankrupt, do I still have to pay my mortgage?

    Yes, if your mortgage lender goes bankrupt you do still need to pay your mortgage obligation. Sorry to disappoint, but there ... Read Answer >>
  2. How does securitization increase liquidity?

    Learn how securitization increases affects working capital and liquidity, and why it matters for a company seeking to increase ... Read Answer >>
  3. Are stocks real assets?

    Learn why stocks are classified as financial assets, not real assets. Understand the properties that determine whether an ... Read Answer >>
Hot Definitions
  1. Universal Health Care Coverage

    An organized healthcare system that provides healthcare benefits to all persons in a specified region. Many countries, such ...
  2. Davos World Economic Forum

    The annual meeting of the World Economic Forum hosted at Davos—a small ski town in Switzerland—in January each year is among ...
  3. Smart Home

    A convenient home setup where appliances and devices can be automatically controlled remotely from anywhere in the world ...
  4. Efficient Frontier

    A set of optimal portfolios that offers the highest expected return for a defined level of risk or the lowest risk for a ...
  5. Basis Point (BPS)

    A unit that is equal to 1/100th of 1%, and is used to denote the change in a financial instrument. The basis point is commonly ...
  6. Initial Public Offering - IPO

    The first sale of stock by a private company to the public. IPOs are often issued by smaller, younger companies seeking the ...
Trading Center