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While it's true even one foreclosure can be a blight on any subdivision/neighborhood, they're still not typically used as true comps for determing value. Not unless there's a certain percentage of foreclosures in the neighborhood.
While it's true even one foreclosure can be a blight on any subdivision/neighborhood, they're still not typically used as true comps for determing value. Not unless there's a certain percentage of foreclosures in the neighborhood.
I am done even discussing this. They affect house prices. Simple as that. You can make up new terms "true comps" to get yourself out of this but in reality they count. The more there are the more they drag down prices.
Location: Halfway between Number 4 Privet Drive and Forks, WA
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Quote:
Originally Posted by sean&diane
I think it is a mis-representation to categorize the drop in prices as being attributable to foreclosures. What is causing the drop in prices is an imbalance of supply and demand. The demand is less than supply because there have been changes in mortgage standards that results in less people qualifying. Foreclosures are the symptom that the mortgage standards used in the last 5 years were faulty. You can tell from this post and many others that private owners are slow to adjust their price to the market. That doesn't happen with banks selling foreclosures, so foreclosures are correcting to the market level much faster.
If there is never another foreclosure, prices will continue to drop until they hit their historic norms relative to income because you now need good credit and real cash to buy a house - thus, limiting the supply. I read an article the other day that wages were flat from 2000 to 2006 - if wages were flat, housing prices should have been as well. So correcting to 2000 prices is not unrealistic and perhaps expected.
I laugh when I see people arguing over whether or not foreclosures should be included with comps to do appraisals. It is an academic argument - no one ever lived through a market like this or anticipated one when they were writing standards on pulling comps. The reality is that you are kidding yourself if you don't think you are competing with them.
Competing with foreclosures? Sure. But they're still not considered true comps (as explained before). I'm sorry that's not what you want to hear.
Location: Halfway between Number 4 Privet Drive and Forks, WA
1,516 posts, read 4,589,470 times
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Quote:
Originally Posted by NatasNJ
I am done even discussing this. They affect house prices. Simple as that. You can make up new terms "true comps" to get yourself out of this but in reality they count. The more there are the more they drag down prices.
And you can go on denying the facts but that won't get you in a house any quicker...
BTW, I thought you were hip on re terms. "True comps" is not made up nor is it a new term.
I explained it before, if you don't get it, ask your realtor.
I am done even discussing this. They affect house prices. Simple as that. You can make up new terms "true comps" to get yourself out of this but in reality they count. The more there are the more they drag down prices.
If the majority of homes sold in your neighborhood are foreclosures, then sure they have an effect. I am starting to think this is another area of "disconnect" that buyers are having trouble with.
Location: Halfway between Number 4 Privet Drive and Forks, WA
1,516 posts, read 4,589,470 times
Reputation: 677
Quote:
Originally Posted by NatasNJ
How do you compete with foreclosures?
My guess is PRICE!
Or you can go buy the dilapidated foreclosure "comp" (as you would like to call it) that has been sitting unmaintained for 2+ years for $30k less than my well maintained, pristine home that is move in ready.
Location: Halfway between Number 4 Privet Drive and Forks, WA
1,516 posts, read 4,589,470 times
Reputation: 677
When an appraiser pulls comps for a bank loan, he/she is usually privy to information regarding if it was a foreclosure. Unless the neighborhood has alot of foreclosed sold properties, those foreclosed "comps" will be excluded in determining value.
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