“I’d like to find out what my home is worth. The house next door was a bank-owned foreclosure and sold way under market value. It doesn’t have any bearing on my home’s value, but will it hurt my chances of selling?”
Let’s address what I call the “It-Was-Just-A-Foreclosure” Syndrome.
Many homeowners automatically dismiss foreclosure sales near their home as “not comparable.” This may be due to the stereotypical foreclosure with the:
– Dead lawn…except for the 4’ high weeds (required for all foreclosures)
– Harley oil stains on the living room carpet
– Boarded window(s)
– Local papers collecting on the driveway
– Whispered rumors of a barely five-figure sold price
But not all foreclosures are fixer uppers (aka “handyman specials,” “beaters” or “dogs”) or sold under market value.
Having sold over 700 foreclosures, I can tell you:
Yes, the typical foreclosure is in below-average condition, but many are perfectly normal or even pristine.
Foreclosures typically sell for 95-100% of their market value, based on their condition.
So a foreclosure is a valid “comp,” or comparable sale. You just need to adjust for the condition.