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How Foreclosures Affect Home Prices in the Neighborhood
By kevin | March 14, 2008
With foreclosure sweeping the nation left and right, it would probably be wise to understand how it could affect home prices, particularly in a small community. Foreclosure properties in different neighborhoods may not look the same. Some of these homes are sold quickly that their “for sale” signs were not even noticed. On the other hand, there are foreclosed homes that will stay unsold for long periods of time and will eventually look abandoned and dilapidated.
If you have these kinds of foreclosed homes in your neighborhood, it is only normal that you worry. Property appraisals will most likely include the market value approach where comparison of three homes sales in the neighborhood is done. If by any chance one of the home sales was a foreclosure, you can be sure that your home’s market value will be affected.
How could this happen?
For starters, some buyers will usually shy away from neighborhoods where abandoned foreclosed homes are abundant. Their interests wane as soon as they see the neglected foreclosed properties. With the loss of buyer interest, the demand for homes in these neighborhoods weakens and home prices decline. Throughout the nation, neighborhoods with a large inventory of foreclosed properties have experienced noticeable drops in home prices.
If you have been trying to sell your home, you should try to look into the foreclosure situation in your neighborhood. If these foreclosed properties have driven down your home’s market value, you can always offer buyers additional incentives. For the most part, you should make sure that your home is in pristine physical condition. You should make an effort to improve your property’s curb appeal which could involve regular lawn mowing and fence painting.
Topics: Foreclosure |