Distressed houses can actually means several things. Some people refer to distressed houses as those properties in which the seller is financially distressed. For example, a seller who is deeply in debt due to divorce, medical costs, bankruptcy, pre foreclosure, and other financial problems, is generally selling not because they wish to but because their financial distress is compelling them to sell.

Some people use the term "distressed houses" to mean houses that are damaged or in need of great repair. Essentially, for these people, the term is synonymous with fixer upper homes. In this sense, distressed houses may be damaged due to natural disaster, neglect, willful damage through fire or other means, or simply due to extreme age. Finally, the term "distressed houses" is used as a synonym for foreclosed homes. That is, some people use the term "distressed houses" to mean real estate which is being sold because the mortgage on the property is in arrears. Bank and government foreclosures offers a fantastic opportunity for a person that is knowledgeable about repairing properties.

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