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I recently sold a house in a neighborhood where the home values were stagnant due to low performing schools. The area and homes are otherwise nice and newer construction (about 20 years old). There was one short sale in the neighborhood that was $100K lower than it would ordinarily get. I noticed several neighbors have put their homes up for sale since then, but for normal prices (100K more than this sold for).
Do you think this one short sale would have affected their values? I was keeping an eye on this one short sale, as the bank had it listed for $200K more than it originally sold for, and then they kept dropping and dropping it like a rock. Other than the schools, it's a really nice house, and if you picked it up and moved it five miles closer to the city (Chicago in this case), it would be worth another $300K or more.
1 sale does not create a market. If there were multiple short sales and/or foreclosures, yes, prices would be effected, but one should not effect the rest of the neighborhood.
Location, location,location. Don't worry about what a house might be worth if it was 5 miles closer to somewhere else.
One short sale won't affect values. If you have an accurate MLS system where you are, that sale will show up and be noted as a short sale . Any appraiser looking at home values to do an appraisal in that area will take note of that .
Are there other sold sales in the neighborhood that are arm's length sales? Those are the sales you need to base your value on. The only problem you would have is if there are lots of recent foreclosure sales in the area. One of anything over a year's time or so doesn't mean much.
Totally agree with the comments above. One short sales doesn't routinely affect the market value of other properties in the same market area. Appraisers will note that the short sales isn't an arms length transaction (atypical seller motivation) and exclude it as a data point in their market analysis.
If, however, there are a LOT of short sales and/or foreclosures in a market area, they CAN have an impact on home values because the resale of those properties by artificially suppress the sale prices of other homes in that market area. The appraiser's Market Conditions Addendum will likely show that trend assuming there are enough data points (home sales) to indicate the short sale/foreclosure impacts on that market.
I recently sold a house in a neighborhood where the home values were stagnant due to low performing schools. The area and homes are otherwise nice and newer construction (about 20 years old).
Did the short sale sell for $100,000 less than your house? You should have bought it.
1 Short sale does not usually effect the market value of the homes in the area.
Unless that was the only sale in that neighborhood, and there were several homes for sale at a higher price and had not sold over the last 6 months to a year. That would indicate the other homes on the market, are all overpriced, with the asking price above what the buyers are willing to pay. This usually occurs, where there are other more favorable neighborhoods (without the faults this neighborhood has) with similar homes for sale at about the same price as these homes are being offered for. This is an extreme condition, but it sometimes occurs, and something that has to be considered.
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