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Your neighbor's foreclosure might cost you thousands of dollars

Charleston foreclosuresIf you own a home, a foreclosure in your neighborhood might cost you thousands of dollars. And granted, if you aren't selling, it might just be a "paper loss" but not necessarily because if you want to take advantage of today's historic low interest rates and refinance your home, that foreclosure down the street might affect the appraisal of your home's value.

But with all the foreclosures and short sales around in today's Charleston real estate market, if you are (or are thinking of) selling your home, it might not just be a paper loss but real money. 

When you're selling your home in Charleston, you not only have to consider competing with the asking prices of other homes of other homes for sale but what the sold prices have been on recently sold homes. And if there was a foreclosure or two in your neighborhood, an appraiser is going to take that into account when valuing a property.

That's exactly what happened to a client of mine last year. We put a very competitive list price on their home for sale and while we didn't get a full price offer (seemingly, with everyone looking for a bargain, full price is the exception rather than the rule), we were able to get to an agreed upon sales price.

But the appraisal took into account one foreclosure in the neighborhood and the appraisal came in for thousands less than the agreed upon price and of course, the buyer didn't want to pay more than the appraisal so rather than lose the deal, my seller agreed to sell it for the appraised price.

So in a crazy way, while foreclosures are a good deal for some, they're not a good deal for everyone. It's just a sign of the times.

Published Sunday, February 06, 2011 8:30 AM by Howard Arnoff

Comments

# re: Your neighbor's foreclosure might cost you thousands of dollars

Love the RE/MAX sign and Yes we do sell a lot of Foreclosed Homes but buyers are willing to pay more for a home that is NOT a short sale or a Foreclosure and I can prove this by recent sales that have closed just down the road from other homes that were foreclosure "deals".  Many foreclosed homes have been neglected with maintenance being put off and many have items stolen when they are sitting so long, it is not uncommon for them to be vandalized as well.  Also, buyers are aware of the pitfalls of dealing with a short sale and if they are not getting a bargain price than they will just go down the street and pay  more to get a normal sale from a normal seller that they can inspect the home and have a seller disclosure, confidence in their purchase, etc.  

Sunday, February 06, 2011 1:29 PM by David Wertan

# re: Your neighbor's foreclosure might cost you thousands of dollars

David, you are absolutely right on several counts, most foreclosures are in terrible condition, most short sales don't get approved and the buyers tire of the wait.

But the sad fact is that foreclosures do tend to bring down property values and even though a traditional seller will get more money for their home (and it will appraise for more), it does cost them some dollars.

And btw, I never knew that was a ReMax sign, I just clipped it off the web and thought it was the prettiest.

thanks for stopping by from time to time.

Sunday, February 06, 2011 1:53 PM by Howard Arnoff
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