Appraisals Negatively Effected by Low Sale Prices on Foreclosed Properties
Foreclosures Weigh on Home Appraisals
Approximately 25 percent of real estate practitioners say low appraisals have broken up deals, according to the NATIONAL ASSOCIATION OF REALTORS®.
While foreclosed properties typically are not included in a comparable sales analysis, they account for about 40 percent of home sales—more than 50 percent in some markets—making it difficult for appraisers to value properties not in the foreclosure process.
Additionally, new industry rules that require mortgage lenders to order appraisals through in-house staff or appraisal management companies means more appraisers without knowledge of the local market are making valuations.
While Zillow.com says non-foreclosures are selling for upwards of 30 percent more than foreclosures, a study of 20 years of home sales in Massachusetts by Harvard University’s Joint Center for Housing Studies indicates that dwellings closer than 100 yards to a foreclosure lose about 1 percent in value.
Source: USA Today (01/04/10)
What Others Are Saying
Lisa Barton, on 01/17/2010, said:
One suggestion I’ve been making to my clients who are considering putting their home on the market is to schedule an appraisal before listing their property. A recent appraisal can help determine the current fair market value and assist in pricing the house appropriately, especially in neighborhoods where there aren’t many sales of comparable homes.
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