How does Short Sales and REO properties affect you?
As a real estate professional in this market, I will tell you that Short Sale and REO properties are a real threat in this market.
Prior to selling a property, sellers will meet with a Realtor to discuss pricing and strategy. The Realtor will provide the seller with comparable properties that are active, pending, expired and sold within the last six months. The six month time frame is important, as the appraiser will look at a six month window when appraising the house for value in the real estate sale that is to come.
What if......there were no short sale or REO properties around the seller's home at the time of the meeting between the Realtor and seller. But, as the marketing period goes on, a short sale or REO property pops up. The short sale will force the other homes in the market to compete at the lower price point to win the shopping buyers. The short sale can erode the price point of an area depending on condition and pricing. It can also deteriorate pricing, depending on what price level it is sold at settlement.
Currently, I am being told that roughly 30% of all homes on the market today are distressed sales. I am also told that right now appraisers are not considering distressed properties in an appraisal.....soon, will they have a choice?
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