One of my agents asked me to help her establish value for a condo her Buyers were going to make an offer on.  In going over the comps with her, she stated:

"Yes, but that was a foreclosure." 

"So?" I asked.

"We usually can't use foreclosures to establish value", she replied.

"When 25% of your comps ARE Foreclosures, do you mean to tell me that you are going to ignore them when ascertaining value?"

"When you put it like that, I guess not!" she quickly answered.

Indeed, when we had a foreclosure sprinkled here and there, there was no need to consider it when ascertaining value.  This year, with such high foreclosure rates, all of that has changed:  Appraisers are no longer ignoring foreclosures when doing their appraisals.  The high foreclosure rates have certainly driven the prices down and they've forced appraisers to modify the way they do business.

Not only are appraisers including foreclosures in the evaluation of the properties, they are also including available listings when analyzing value.  So if you have 6 sold comparables at $200K and 3 comparable properties currently listed at $ 150K, guess what?  Your active comparables will pull down the value.  ...And you thought the word "comparables" referred only to sold properties..

In a tenuous market such as ours, simply analyzing sold comparables is no longer sufficient.  Foreclosures AND the listings currently available for sale are now included in establishing value.  This is Real Estate 2008 Baby!  Get with it!

Myrtle Beach Real Estate by Mirela Monte                           Join The Optimist Group!