In the past when a Foreclosed home sold, it typically was not used in the equations for appraisals for other surrounding sales. It was the exception, NOT THE RULE.

In today's Real Estate Market, this is not the case.

According to Elizabeth Weintraub's article:

Home Selling in a Market Dominated by Foreclosures and Short Sales, If the house for sale next door to you is a bank-owned home, but all the other homes for sale in the neighborhood are not, you don't have much of a problem.

However, if most of the homes that have recently sold in your area were bank-owned homes and short sales, you have a problem. That problem is you must compete with foreclosures and short sales to sell your home. Your home's market value is directly related to distressed sales if those short sales and foreclosures dominate the neighborhood.

Prior to the real estate bubble of the mid-2000's, appraisers would often ignore the distressed sales when appraising a home. Since then, appraisers pay close attention to the number of distressed sales that have closed and those presently for sale. What's a regular seller with equity supposed to do to compete?

 Pricing a Home With Equity Against Foreclosures and Short Sales

Pricing a home is at best a mix of facts, science and emotions. It's a combination of wearing a seller's hat and stepping into the buyer's shoes. Bear in mind that it doesn't matter much how much you think your home is worth if a buyer disagrees.

Try answering these 3 questions: 

What would make a buyer buy your home over a foreclosure or a short sale?

Why would a buyer's lender appraise your home for more than a foreclosure or short sale? 

 How much more is your home worth than a distressed sale?

You might be surprised at the answers. The truth is your home is not worth a whole lot more than a foreclosure, even if you put in upgrades, if all the recent sales are foreclosures and short sales. Appraisers don't give a huge allowance for upgrades like they used to do.

Buyers want a good deal. They might buy a home that needs carpeting, for example, if adding the cost of new carpeting still makes that bank-owned home's price attractive. On the other hand, if your home, with equity, is in tip-top shape and priced within the range of distressed sales, a buyer is much more likely to choose your home.

However, say, a bank-owned home priced at $200,000 needs $10,000 worth of work or improvements. If your home doesn't need any work, a buyer might offer only $210,000 for your home.

Examine the Foreclosed and Short Sale Comparable Sales 

Look at every similar home that has sold in the neighborhood over the past three months to determine comparable sales. The list should contain homes within a 1/4 mile to a 1/2 mile and no further, unless there are only a handful of comps in the general vicinity or the property is rural. 

 Pay attention to neighborhood dividing lines and physical barriers such as major streets, freeways or railroads, and do not compare inventory from the "other side of the tracks." Where I live in the Land Park neighborhood of Sacramento, for example, identical homes across the street from each other can vary by $100,000. Perceptions and desirability have value.  

Compare similar square footage, within 10% up or down from the subject property, if possible.  

Compare homes with similar ages. One neighborhood might consist of homes built in the 1950s, co-mingled with another ring of construction from the 1980s. Values between the two will differ. Compare apples to apples.

It is important to find a local Realtor that you feel comfortable with. Your agent will be equiped with all the tools and resources to Examine the Foreclosed and Short Sale Comparable Sales for you!

FOR THE LOCAL AREAS OF PINELLAS AND PASCO COUNTY FLORIDA- I AM YOUR AGENT!

Jennifer Davida/ Future Home Realty (727) 480-5031  http://www.Good-As-Sold.com

For more great Real Estate related articles by Elizabeth Weintraub, visit her site http://homebuying.about.com