A common question that many people (agents & homeowners alike) ask relating to homes for sale in North Raleigh, NC is, “Do appraisers use short sales in North Raleigh and foreclosures in North Raleigh as comparables when conducting an appraisal on non-distressed homes for sale in North Raleigh, NC?”
Recently, the Appraisal Institute wrote an article Providing Credible Appraisals in a Declining Market, the Institute explained that:
“Foreclosures and short sales can provide important information for appraisers, who develop valuations based on market data and market forces.”
As of end of the year 2011, distressed property sales (i.e. short sales in North Raleigh & foreclosures in North Raleigh) accounted for around 10% of the homes sold in North Raleigh.This information becomes valuable to an appraiser when the appraiser is determining valuation of homes for sale in North Raleigh.
On whether an appraiser should use distressed properties as comparables for homes for sale in Raleigh, NC the Institute was very direct (all items in bold were shown as bold in the original paper):
“An appraiser should not ignore foreclosure sales and short sales if consideration of such sales is necessary to develop a credible value opinion.”
And they explained the possible differences between short sales and foreclosures:
“A short sale … might have involved atypical seller motivations and so might not be an ideal comp…
A sale of a bank-owned property might have involved typical motivations, so the fact that it was a foreclosed property would not render it ineligible as a comp.”
The argument of whether or not short sales in North Raleigh & foreclosures in North Raleigh should or should not be used when appraising non-distressed homes for sale in North Raleigh still is at the forefront of discussion with many. However, there is no longer any doubt that short sales in North Raleigh and foreclosures in North Raleigh will be used for comparables when determining value on homes for sale in North Raleigh, NC.
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