Is it really a good idea to purchase a distressed home? What is a distressed home anyway and why is everyone talking about it? A distressed home is a property under foreclosure or a home sold because the homeowner could no longer afford to continue paying the mortgage. Other lenders would agree to a short sale because they can earn more through this than foreclosing the home. However, most lenders would foreclose the property and have it for sale at a discounted value.