How foreclosure and short sales affected one person in a cul-de-sac of eight homes. It was really was heartbreaking when I had to tell her that her home wasn't worth as much as she thought it would be when she went to sell it so she could buy her dream home.
Recently, I had a client that owned a nice 1979 ranch on a wonderful little cul-de-sac in a great neighborhood with eight other homes. She told me on the phone that recently they had four of the families move out and she wanted to put her home on the market, because she had finally found her dream home.
So, I decided to pull the comparables and what do I find? Only one is still on the market and has been for only 1 day, but is now bank owned. The other three were sold on short sale and went for a lot less than they had bought for in the last couple years. There were two other homes on the next street over that were for sale also and they looked like they were priced lower than they probably wanted to because they had to compete with those bank owned and short sale properties that had gone on the market.
So, when I sat down with her and told her what she could sell for, if she wanted to sell quickly, she couldn't believe her ears. Just last year you told me that I could sell this place for $25,000 more than that. I had to explain to her that last year you weren't under the gun to sell quickly as you hadn't found your dream home yet. This year is a little different. You have a home picked out, and if you don't act quickly, you could lose it. Also, there are 3 properties that are on this cul-de-sac that were sold in a short sale situation and one that is now bank owned, selling for thousands less than I'm even suggesting. The two houses on the next street over are selling for a little more than this, just trying to compete with the bank owned properties and the short sales.
That is when she yelled, "That affects me? I'm not the one not paying!" I said, "I know, but because those homes had to be sold for less to get them sold quickly, that brought down other homes in the neighborhood that needed to sell quickly, and now you need to sell quickly and the spiral downfall of prices in this neighborhood continues. It is true that this fast of a price drop wouldn't have happened had those four families not had been on the verge of losing their homes, but it happened and I'm sorry to say it affected you!"
She thought about it and understood and realized that maybe that is why her dream home is priced the way it was and they maybe in the same situation. Lucky for her she had lived in the house since 1981 and had lots of equity, but if she had only lived there a few years, she would have had to bring money to the table to sell her property.
So, even though your house may not be what it was worth last year because of your neighbor, it could be right back up there in value next year. If you find that dream home, remember their value maybe down just as much as yours, if not more, and you could get your dream home at a dream price!
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