Foreclosures are Spoilers
July 7, 2009
Post Tags: foreclosure spoilers , foreclosures kill comps
A True Tree House
Here is the real issue with foreclosures and sellers. When those properties close they go into the pool of closed transactions which are used by appraisers to arrive at current market value. As each of those foreclosures sell they are no longer your competition. They have now become your spoiler. When those homes are sold they aren’t moved, they stay right where they were in your neighborhood.
Most buyers aren’t going to pay cash for a home. If they need a mortgage they need a loan which mean your house has to appraise for what they are willing to pay for it. The more foreclosures that tell the lower that appraised value is going to be.
The bottom line here is price it just under market or plan on holding it for either a cash buyer willing to give you your price, or holding the home for a couple more years.
Don’t make the mistake of thinking that when the foreclosures are sold your home will sell for more. Just the opposite could be true.
July 8th, 2009 at 6:45 am
Your 100% right Dave! In fact, in some areas with a large number of foreclosures resulting in short sales and RE0 sales, it is almost impossible to determine the market price for a “normal” retail sale. Appreciate your insight!