Selling Your House? Beware of Foreclosures
Posted on August 17 By Justin McHood
If you are considering selling your house, one of the first things you may want to consider when setting the asking price is "how many foreclosures are in my neighborhood?" While you may think that the foreclosure crisis isn't fazing you because you can make your payments and just need to sell your home due to job transfer or some other reason - when it comes time to sell your house is when you realize the foreclosure crisis is very real.
According to a story in the Arizona Daily Star:
If you are trying to sell your home in this market, your biggest challenge probably isn't finding a willing buyer, but the foreclosure down the street.
Not only do you have to compete in price with it, but that foreclosure is going to factor into your appraisal as a comp, possibly scuttling a deal. Is it fair? Probably not. There can be a world of difference between a bank-owned home that's been through hell and back and a gently used home that's been lovingly maintained by its owner. But we're in a declining market and lenders are hedging their bets against falling values.
"The way the banks feel is, they want the lowest value possible," said Edward Madson, of Madson, Brown & Assoc. Real Estate Appraisers. "They are worried the statistics for Arizona (show) that it is a declining market." Not only are lenders pushing appraisers to include foreclosures as comparable sales for non-foreclosures, but they are also limiting appraisers to finding sales within a one-mile radius and three months time, Madson said.
Is this happening all over the US or just in the hard-hit states of Florida, California, Arizona and Nevada?
One of the largest problems is that there is no uniformity to the way that appraisers account for foreclosures and no standard way to use them as a comparable sale or not. Until there is a standard way of how to include the foreclosures or leave them out in appraisals for traditional sales it will continue to add another level of chaos in an already shaky market.
Justin McHood is a loan officer living in the Phoenix, Arizona area. You can find Justin on Facebook, Twitter, ActiveRain or LinkedIn and he is happy to answer any mortgage-related questions that you may have.
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