Many times I go on listings appointments and while going over the active listings and comparable listings with the property owner I will mention that there is a house very similar to theirs down there street listed that is in foreclosure.  The owner will often say, “That does not affect my value, that is a bank and they are desperate”.

Unfortunately, it does affect your value; the number of foreclosures in the market affects the value of every property listed for sale.  Buyers do not care who the seller is, they just want the best value.  Many times, if the bank foreclosure is the best value, they will buy it.  That sets a comp and it hurts the value of your property because the next buyer comes along and will ask how your property can be worth $800,000 when the same house down the street just sold at $700,000 and the market is worse today than it was 2 weeks ago.

We in Real Estate hate to see this happening because it makes our job much harder.  It is important to realize that what is listed for sale and what has sold recently affects the value of your property whether you like it or not.

I recently went to list a property and the house next door had just sold at $850,000.  When I told the owner that, he said that sale did not count because the seller was desperate.  I told him that even though the seller was desperate, the home had been on the market, started at $1.2 million, was reduced to $1.1 million, was then reduced to $995,000, was then reduced to $895,000 and finally sold at $850,000; there is not way that the property was worth $1.2 million because nobody even came close to making an offer.  He had a hard time understanding that his house, which was the same size, same view, same age, same condition was worth $850,000.  It did not really matter what the property was worth two years ago, it only matters what it is worth in the market today.

Sincerely yours,

James Wedgeworth

Broker/Sales Agent