subject: The Impact Of Foreclosed Homes For Sale In Local Markets [print this page] Foreclosed homes can appear in any community across the country. Some foreclosed homes are barely on the market at all and you wouldnt even know that they were up for sale because the transition from the original owners moving out to the new ones moving in is only a few short weeks. These foreclosed homes really dont impact the housing market that surrounds it.
On the other hand though are the foreclosed homes that are a true eye sore to the neighborhood. They may be very messy on both the outside and inside. The lawn may be filled with trash or useless junk and be unmowed, the windows may be boarded up, and the house may be very far behind in necessary upkeep and repairs. Their curb appeal is zero. This makes the entire area look disheveled and area homes lose some of their value as a result. This can be a nightmare for someone who is looking to place their home up for sale anytime in the near future.
There are different types of foreclosures which may impact the area. The first is a pre-foreclosure which is in the pending area of foreclosing. It has not yet been declared to be in foreclosure and the owner may still live there. It is not yet available for anyone else to buy on the market. Auction foreclosures are the second type and typically these homes are bought by investors who may try to rent them out after fixing them up. However, some individuals may also go to the auction houses to see if they can get a good deal as well. The type that you probably think about when you see the term foreclosure is the listed foreclosure owned by the bank. It has been listed with the real estate brokers and will appear as either bank owned or lender owned which is essentially the same thing with different wording.
The value of someones home is based on an appraisal which can be completed in any of three ways. The first is the cost approach which takes into account the land value along with the cost of building the home. A second method which is not really used except for multiple unit homes is the income approach which compares the units with capitalization rates. A market value approach is where foreclosed homes can really impact your homes value because it compares the home to three other sales in the local area. Realtors try not to use foreclosed homes for comparison but if the surrounding neighborhood is filled with nothing but foreclosures they dont really have an option and it has to be in the equation as well.
Many people feel that the foreclosed homes only impact less than 1% of the area homes but it can portray a negative image on the area. Some people may not want to live in an area where the homes appear disheveled. It gives a negative image to the surrounding community. Each home must be evaluated individually to determine how it will impact the local area.
