Are you interested in selling your house and hope to make a good profit? Are you in a neighborhood where there are numerous bank-owned properties for sale? If so, selling your house might not be as easy as you had hoped. Why? The reason is simple. You will be competing with short sales.
What are short sales? When someone goes into foreclosure, a real estate investor can offer the bank a price for the property that is less than what is owed on the mortgage. If your home is comparable to the short sale homes in size and condition, you will have difficulty selling your house for more than the short sale houses. The market value of your home is related to the short sale homes, if they are dominate in your neighborhood.
During the mid-2000’s, real estate appraisers usually ignored the short sales when they appraised homes, because there weren’t a substantial number of them. Now, due to the economy and the record number of foreclosures, appraisers are careful to take note of the short sales that are on the market in your neighborhood and the number that have actually closed. How can a homeowner who is not in foreclosure and has equity in his home actually compete with all the short sales?
First, you might ask these questions:
• Why would a potential buyer buy your home when they can buy nearly the same home through a short sale?
• Would the appraiser really appraise your home at a higher price than the foreclosures or short sales?
• Is your home worth more than a distressed home? If so, how much?
The answer may not make you happy. The truth is that your home actually isn’t worth very much more than the foreclosure, even if you have made improvement and upgrades to your home. Upgrades don’t have the same value that they did in previous years.
It is reasonable to think that buyers want to find a good deal, which most bank-owned houses offer. Even if the buyer has to do some minor repair work or replace carpeting, the price for which they can buy the foreclosure home will still be a good deal for them. However, if your home is in perfect condition and is priced in the same ballpark as the distressed house, the buyer would probably choose to buy your home.
On the other hand, if a foreclosure property is price at $150,000 and needs about $10,000 in repairs, and your home is in excellent condition, the buyer may only offer you $160,000, which is the cost, plus repairs, of the short sale home.
When you price your house, be sure to check all comparable sales in your neighborhood within a half mile from your house for the past 3-4 months. Make sure you consider the condition, square footage and age of the comparable properties, and then price your home accordingly. Good luck in selling your house!