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Old 09-18-2008, 04:20 PM
 
Location: Alexandria, VA
754 posts, read 1,736,479 times
Reputation: 597

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Realtors...how does a foreclosure in a neighborhood affect the value of the other properties in the neighborhood? I know intuitively the answer is it lowers the value. However, there are certain risks with a foreclosure and the price of a foreclosed property does not necessairily reflect the value of the neighborhood because it is a distressed sale. Do buyers take this into consideration? We have a foreclosure in my neighborhood selling for $25K lower than our home. However, the owers of that property gutted the home (tore up carpet, no appliances, lawn with all weeds etc.) in comparison we have hardwood in the kitchen/foyer, tile in all the bathrooms, sprinkler system with well, fenced professionally landscaped yard, lot on a marsh, ceiling fans/lights in all the bedrooms etc. etc. do buyers take these things into consideration or do they automatically devalue our home because of the price of the foreclosure? I am concerned because I need to relocate Oct. 25th and have zero desire to return to this area therefore I want to sell and move on. So far our home has been on the market for almost two weeks with only one showing. Is this normal? I know my realtor is advertising in the paper, real estate book, home search magazine, realtor.com and has pics and a virtual tour of our home. Am i jumping the gun? I really need a sale before I leave or the situation will just be uber stressful. I want to be proactive and not reactive. We have a LITTLE wiggle room after commission with our current asking price, we would pretty much break even if we lower $10K and would have to pay out of pocket to buy down the mortgage any lower than that. Last year we thought of selling and the realtor said $415K, now it is listed for $374.9K....needless to say we want to bail before this gets any worse. Any ideas/thoughts/advice would be great. Thanks! BTW I am located in Chesapeake, Virignia.
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Old 09-18-2008, 04:48 PM
 
Location: Virginia Beach, VA
2,124 posts, read 8,828,677 times
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Hi analyze, I can only say so much. You are in my MLS and I do not want to "go behind the sign" with advise.

but I can tell you, in a general sense, that appraisers should be aware if a foreclosure in your neighbborhood is for sale and becauase of those circumstances, it caused the price to be so much lower. They will call it an anomoly and not use it as a comp. Assuming there are other comps for them to use.... However, most appraisers in the area have been adding the line "in a declining market" which means they have priced about 5% below....

If you have been on the market for 2 weeks and haven't gotten much action, I would give it this weekend, then adjust my price... by the 10k. You need to get action fast.

Shelly
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Old 09-18-2008, 04:56 PM
 
Location: Houston-ish, TX
1,099 posts, read 3,729,451 times
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Is there such a thing as an neighborhood without a foreclosure anymore?

BTW, I lived in Chesapeake for a while, and I loved it, I miss it so much!
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Old 09-18-2008, 05:03 PM
 
Location: Stewartsville, NJ
7,577 posts, read 22,576,589 times
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Quote:
Originally Posted by MikiJayne View Post
Is there such a thing as an neighborhood without a foreclosure anymore?

BTW, I lived in Chesapeake for a while, and I loved it, I miss it so much!
we only had one in my town and it closed last week. I'm sure it may hurt comps a little but my neighbor who just sold - sold high so that may help level it out a bit.
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Old 09-18-2008, 05:23 PM
 
Location: OK
2,825 posts, read 7,531,400 times
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Quote:
Originally Posted by wileynj View Post
we only had one in my town and it closed last week. I'm sure it may hurt comps a little but my neighbor who just sold - sold high so that may help level it out a bit.
Unless there are so many foreclosures that the market IS foreclosures, one forecosure will not affect the value of your house. Other factors, like being in a declining area might.
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Old 09-18-2008, 06:42 PM
 
Location: NC close to the MTs and near the lakes.
2,766 posts, read 5,514,357 times
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Quote:
Originally Posted by shellytc View Post
Hi analyze, I can only say so much. You are in my MLS and I do not want to "go behind the sign" with advise.

but I can tell you, in a general sense, that appraisers should be aware if a foreclosure in your neighbborhood is for sale and becauase of those circumstances, it caused the price to be so much lower. They will call it an anomoly and not use it as a comp. Assuming there are other comps for them to use.... However, most appraisers in the area have been adding the line "in a declining market" which means they have priced about 5% below....

If you have been on the market for 2 weeks and haven't gotten much action, I would give it this weekend, then adjust my price... by the 10k. You need to get action fast.

Shelly


In my daughters neighborhood there is a forclosure listed at $349,000 but the house two doors away from that property has listed his price the same amount and it is a bigger home so that eagerness to sell before the forclosed home will drive that neiborhoods comps down.That home is listed $50,000 less then the last home that sold and a year ago these homes were listed for a little shy of $600,000
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Old 09-18-2008, 07:12 PM
 
Location: Alexandria, VA
754 posts, read 1,736,479 times
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lorriem that is exactly my point. Because the reality is foreclosed properties become competition for other sellers in the area so to be competitive and attract the buyers you end up having to price your property lower than what the market in your area would support without the distressed property. I have a feeling the reason why I haven't had more action is because next to that foreclosure my property appears to be "high" although the comps in my neighborhood are from $370K+. I am talking comps from closed sales not listings. So my question is really about the perception of value to the buyer as opposed to what the value would be if the property was appraised...
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Old 09-18-2008, 07:36 PM
 
Location: Barrington
63,919 posts, read 46,615,875 times
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Knowing why a home sold for what it did, when it did is important.

My MLS now requires a flag on all closed foreclosures and short sales.
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Old 09-18-2008, 07:53 PM
 
Location: Charlotte, NC
2,193 posts, read 5,043,874 times
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I've been looking at homes as a buyer. So from my perspective I wouldn't expect your house to be as cheap as the foreclosed one. Foreclosed homes generally need some type of work (usually at the least new carpet and fresh paint job and then maybe a stove or new tile etc). So that would have to be added to the price of the home.
I put an offer on a foreclosed home but saw another home in the same neighborhood for about 20K more. It seemed fair as the more expensive home was in mint condition.
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Old 09-19-2008, 03:05 PM
 
Location: Alexandria, VA
754 posts, read 1,736,479 times
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I have a showing this Sunday. We are going to do everything we can to make sure the home is in tip top shape. What our realtor told us is many buyers are looking for a bargain so they prefer the would prefer a foreclosure home that needs some work over a move-in ready home that comes with a slight premium. We will see how this weekend goes and consider dropping right under the $370K mark. I will let you all know. Cross your fingers and thanks for all the comments!
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