This post serves as an answer to a question I've been receiving alot lately: Are foreclosures effecting my property value? Well, in a nutshell, yes. Foreclosures are priced to sell quickly and as we say in the market - 'gimme that 30 day price.' That's the top market time that's expected for a foreclosure/REO.
This is written by a gentlemen in South Carolina, JL Boney and would give you a great prespective on today's market thruout the country. Because foreclosures/REO's are everywhere - even in your neighborhood!
So you've decided to sell your house and you are well aware of the fact that homes for sale in your community have involved foreclosed properties. All those homes that sold in the past 6 months were bank owned and they weren't sold by an individual, but instead, they were sold by those evil banks that got us into this mess in the first place. Not only did the Cretans foreclose on the homes and kick out homeowners, but now they step in and undercut the prices of other sellers and steal their buyers. But we don't have to price our house the way the bank does, because ours is not a foreclosure, so we really don't have to worry about because ours is worth more.
Well welcome to the harsh reality of what I like to refer to as the truth. It's not always a fun thing, but you have to face it if you want to be successful in today's market. All those foreclosed properties in your community do affect your home. They do lower the market value in a lot of cases, because the banks do lower their prices to aggressively market their properties. As a result, the market value of comparable properties like yours does change.
I know that's not at all what you wanted to hear. In fact I didn't really want to say it, but it needed to be said. You can't ignore the facts.
The facts are unfortunately something that we all have to face and foreclosures and bank owned properties are a fact of life today. They are your competition and you do have to price your house for sale in accordance with the current market value for your community.
Another horrible fact to face is that pricing is one of the most important things to focus on when selling a house. Having a house that's in great condition is also extremely important, but if you find yourself overpriced by ten or twenty thousand dollars, you don't stand a chance of moving anytime soon. So while you may be able to get a little more for your house due to it's better condition, you may want to lose the theory that your house isn'tt affected by foreclosures. Unfortunately, we all are, and we just have to accept it and move on.
You and JL are unfortunately correct, when people are looking at properties Price is the ultimate amenity all things come in second to that consideration. So as foreclosures go so does the rest of the market. Give me one (or two) above market cash sale to use as a comp will be a (prayer before bed) familiar refrain. You are asking for a unicorn...no one will over-pay for a house when there are bargains to choose from.
Steve: Excellent point to remember that buyers will not over-pay for a house when there are bargains to choose from. The price is the #1 factor, then condition & ammenities from there. What can I get for that price?
Boy that's a big YES! Unfortunately, everyone is looking for a deal these days, and there are plenty of them out there. No one wants to pay more for something if they can get it else where, usually in the same neighborhood, for less.
I had a buyer bring up the foreclosure price comparison. Apples and pineapples. Much education still to be done!
Janice & Bill: JL expressed my thoughts on the point to the letter.
Well said!
Lyn: When foreclosures dominate the market, they do affect market value. And I hate to say it, but banks are just much more reasonable when it comes to price. They are not making emotional decisions, but business ones. Regular sellers have a hard time taking emotion out of it.