Valuations no one likes...

By
Real Estate Agent with Atlanta Communities 303302

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.

Posted by

Peter den Boer, Associate Broker, Realtor

Atlanta Communities Real estate Brokerage

 

Ph. 770.713.1545

www.denboerhomes.com

 

I write about daily life as a Realtor in the Towne Lake Community in Woodstock Georgia.

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Rainmaker
1,025,340
Margaret Goss
Baird & Warner Real Estate - Winnetka, IL
Chicago's North Shore & Winnetka Real Estate

Well there had to be a reason since the comps didn't seem to show the problem. Anytime newer homes sell less than older ones will be a problem.

Nov 28, 2018 05:31 AM #1
Rainmaker
3,280,491
Sheila Anderson
Referral Group Incorporated - East Brunswick, NJ
The Real Estate Whisperer Who Listens 732-715-1133

Good morning Peter. This is a sad story. It is unusual but sometimes things happen over which we have no control.

Nov 28, 2018 05:33 AM #2
Rainer
307,464
Dena Smith
DSmith Realtors - Irving, TX

I don 't usually consider new construction a comparable for pre-owned. Did you clients get the appraisal?

Nov 28, 2018 06:08 AM #3
Rainmaker
2,935,141
Wayne Martin
Wayne M Martin - Chicago, IL
Real Estate Broker - Retired

Good morning Peter. There are those who got caught at the high side of the market as community pioneers that have lost half or more value when the new developer lowers the entrance fee with inferior product. Sad for the sellers Enjoy your day!

Nov 28, 2018 06:36 AM #4
Ambassador
2,895,786
Debe Maxwell, CRS
www.iCharlotteHomes.com | The Maxwell House Group | RE/MAX Executive | (704) 491-3310 - Charlotte, NC
Charlotte Homes for Sale - Charlotte Neighborhoods

Unfortunately the rise in home prices "didn't lift all boats". I feel for your sellers. This is not their fault but they are facing the consequences of lower price points for the new homes in the neighborhood. Getting an appraisal was probably your best approach.

Nov 28, 2018 02:46 PM #5
Rainmaker
4,962,883
Roy Kelley
Realty Group Referrals - Gaithersburg, MD
Roy and Dolores Kelley Photographs

Thank you very much for sharing this experience.

Smaller home in the neighborhood can definitely impact the values of the larger homes.

Dec 03, 2018 08:09 AM #6
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Peter den Boer

MBA,GRI, Associate Broker, Realtor
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