How are foreclosures factored into comps?

[walidm]

Originally Posted by jinxor

I do not understand how foreclosures are confidential information. Aren't they in public records? I can understand the nondisclosure if the bank orders the appraisal, but can't individuals order appraisals too?

An appraisal is confidential to the buyer as is a CMA done for a buyer or done specifically for a seller. While the home information may be viewed publicly, how the data was compiled, comps adjusted, data was selected, and final figures were arrived at are confidential to the client.

[MikeJaquish]

Originally Posted by North_Raleigh_Guy

Thanks for the great replies. FWIW, I am in a small subdivision (only 60 homes) and this has been the only foreclosure in the past 18 months and we all saw it coming (home was not maintained at all, owner was delinquent on HOA dues for 8 months ect) and I have no reason to expect a flood of foreclosures in the neighbirhood. There are sales regularly in my neighborhood so I imagine 6 months from now there will be 4 more recent sales after this foreclosure is sold. My neighborhood is comprised of very similar homes with almost identical upgrades, lot sizes ect... so just about every sale is considered a good comp.

Thanks again for the great explanations!

NRG,

You have hit on a key point.
Most duress sales include the dynamic of a home not being maintained, along with the emotions of the nature of the duress.

When one is not making payments on the property, or HOA dues, it usually means that their is no money being put into the home either.

I was in one of the foulest homes I have seen yesterday. A foreclosure. Actually horrifying to see kids' toys around.
Definitely... I wouldn't want it comped to set the value if I lived in that neighborhood.