Re: include or exclude foreclosures in comps? - Posted by DemosL
Posted by DemosL on October 04, 2009 at 14:35:21:
It seems like if you’re buying and want to pay the lowest price possible, your comps would include foreclosures. If you’re trying to sell at the highest price possible, you would exclude wholesale purchases and foreclosures.
Re: Appraisers, can you please chime in? - Posted by Royce
Posted by Royce on October 05, 2009 at 22:48:37:
I bought a foreclosure a couple of months ago. In this development, there have been a couple foreclosures sold around $100,000 and one for $90,000. There were normal sales at $112,000, $115,000 and $133,000. The $133,000 was mint and finished to a T. My foreclosure was purchased for $49,000. The house was very outdated but had mostly cosmetic issues. The ONLY reason why I got the house for that price was because I went to an auction, competed with a couple of investors and paid cash. I was sure that I would lose the deal since it was a seller confirmation auction and a rediculous price. I was shocked when the bank accepted my bid. They could have placed it on the MLS and sold it for $80,000+ in a blink of an eye.
Many foreclosures don’t have appliances, have plumbing problems along with other issues due to being vacant. They can be hard to finance making low-ball cash offers more desireable to a bank than a better offer, financed. A bank can and many times, will sell a property for less than what it is worth.
If appraisers were allowed to use comps in an unknown “as is” state sold by motivated sellers as a comp for a normal sale, we would have an even larger problem on our hands. Prices would continue to spiral downards.
As I stated earlier, my house was sold for much less than it’s current market value (49K). It had a couple of appliances that didn’t work, plumbing issues, missing railings and many other minor cosmetic problems. No appraiser is going to know what the circumstances were with my purchase or any other of the distressed sales. Because of this, it is not a valid comp.
Re: include or exclude foreclosures in comps? - Posted by Ashley
Posted by Ashley on October 04, 2009 at 15:10:39:
Yep. Is there any way to identify wholesale sales other than the absurdly low purchase price?