A question that I am asked several times a week from my fellow Realtor friends and sellers.  The answer -Yes or could be No.  Seems like a safe on the fence answer but to answer the question there are clarification questions that need to be addressed.  I am a certified appraiser so by nature I have to get a more in depth picture of what is going on around the home in question.

•1.   Are you located in a neighborhood that has several homes that has been foreclosed on?

•2.   Do you have a lot of homes in your area/neighborhood that are currently for sale that are foreclosed properties?

•3.   Do you see that several homes in your area/neighborhood are going into foreclosure?

The key is what is your competition or predominate sales that have taken place.  If the home is located in an area/neighborhood that has foreclosure stress then the answer to the question is Yes.  The activity predominate type of activity taking place dictates comparable sales and competitive competition and that becomes your market.  It is very important that you still consider varied factors in the valuation such as condition, repairs, and points of difference. 

If you have some foreclosure activity scattered in the area but it is not dominate and your neighborhood is comprised of typical sales activity then the answer is No.  One sale does not dictate value.  If a foreclosed sale is not the normal market then it should be excluded unless you are valuing for a foreclosed price projection. 

 The key is to look at the market the home is located.  Utilize sales that are indicative of the normal activity taking place.  Just as one high sale does not set the market one low sale does not either.  Homeowners are afraid that one foreclosed property for sale or one that recently sold will pull the valuation of their home down.   Many sales will be used to determine the value of a home and the properties that are skewed should be eliminated.  It is critical in the economic market that we are experiencing to utilize not only current sales activity but current listings to help us stay in step with the market.