Tuesday, April 01, 2008

Foreclosure Down the Street; does it affect your value?

Sometimes it can. Just because a property sells does not always make it a comparable. Often a duress sale doesn't accurately reflect true market conditions, such as a foreclosure, short sale, estate settlement, tax sale, divorce, condemnation or other involuntary sale conditions.

Professional appraisers use a transaction standard called “arm's length.” To qualify, the buyer or seller must not be related to each other or have common interests—they have each other at “arm's length”—that establish a fair market value. In a “non-arm's length” transaction, the relation-ship between the parties may cause one or the other to accept less than they are entitled to or pay more than fair market value.

Foreclosures are more often than not considered “non-arm's length” transactions by appraisers and may not be considered a true comparable. On the other hand, foreclosures do impact pricing. Some researchers report as much as a 10% discount in a property's value if a foreclosure is on the market within 250 yards. Although not a true comparable, foreclosures must be factored into establishing the right price for a property in the real world.

Now to the tricks of the trade: a Realtor with a good sense of your local market may be able to have any foreclosures removed as "comparables" from an appraisal by providing condition reports, pictures or other data that would support the fact that your property is worth more. Often, this is in the conversation with the appraiser and the reputation of the Realtor in the appraiser's eyes. So experience does matter to you when you are selling your home, especially in the local Denver real estate market.

Want to read more about selling your home?

Would this kind of service could be valuable to you or your friends? Whether it is Highlands Ranch, Lone Tree, Littleton, Castle Rock, Centennial, Englewood, Parker, Elizabeth, Larkspur, Franktown, Kiowa, or anywhere in metro Denver Colorado, we offer real estate advice, properties for sale, multiple listing service, property listings, mls, all available at www.DenverRelocation.com. Drop me a note to pete@Denverrelocation.com

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