I have some good friends who purchased a home through me many years ago. They are looking to sell and move. So, I began the process of valuing their home and ran up against some issues. I kept coming up about $50,000 or so below what they paid years ago. Common sense dictates that usually a homes value increases over time. Unfortunately, this was turning out to not be true.
I have run valuations on their home about 10 times over the past year, always believing that I was missing something. This home sits on a hill with a beautiful view. The home itself is a beauty, weighing in at around 5,000 square feet. My gut was screaming at me, higher! My brain was saying lower.
So the potential sellers and I talked at length and I suggested they get a professional appraisal. This would help us determine what a buyer's loan company will see in the event of an offer. I was perplexed why I just could not seem to find a valuation that made sense. Then I received a call yesterday from these potential sellers.
He had been to an HOA meeting the night before and had spoken to another homeowner about values in the neighborhood and she mentioned that they had an appraisal done recently to get ready for the upcoming sale of their home. They came in $100,000 under where they expected to be. What in the world was going on? Well the HOA speaker was the current developer of this neighborhood and he shed some light.
New homes in the neighborhood are being built at a much lower price point and he says that the upper price ranges just are not selling. I disagree on the last point but let's move on. These lower priced homes are pulling the neighborhood comps down dramatically. So even if home prices have significantly increased over the past 10 years, this neighborhood is not participating.
My friends are determined to sell this Spring before more lower cost homes are built. I feel bad for them, but no one could have foreseen the bankruptcy of the initial developer and their bank. Such turn of events happens and can significantly impact the value of your home.
Make sure to contact a professional real estate agent to help you value your home if you are looking to sell.